Bilateral International Relations Prelims cum Mains

India, Iran pledge to maintain trade levels

Image result for indian iranThe News

  • Striking a defiant note against the U.S.’s demands to zero out oil imports and end engagement with Iran, Indian and Iranian officials said they would maintain the momentum of bilateral cooperation between them.


News Summary


  • Earlier, the United States pulled out of the 6-nation Joint Comprehensive Plan of Action (JCPOA), and decided to re-impose sanctions on Iran, due to be implemented in two batches from coming months.
  • US push:
    • In line with its sanction, US has declared a campaign to isolate Iran and asked many countries to close all trade ties with Iran. India has been told to take oil imports to “zero” along with other trade.
    • The U.S. sanctions, pushed from visit of U.S. U.N. envoy Nikki Haley to India asked India to revise ties with Iran.
  • Iran push:
    • On another hand, Iran had warned that India would face a deprivation of all other privileges Iran has offered to India if it chose to replace Iranian oil from other sources.
    • Although it clarified later that Iran understands India’s difficulties with its choices and will respect its sovereign right to choose partners.
    • It also expected that Indian government will make proper decisions in favour of the national interest of India.
  • Implication of US pressure:
    • If India rejects U.S. pressure, it risks sanctions as well as incurring the displeasure of its all-powerful friend and defence partner.
    • If it yields, it risks its relationship with traditional partner Iran, access to important trade routes through Chabahar, the International North South Transport Corridor (INSTC), as well as its international reputation.
  • So India finds itself in complex negotiations with Iran and USA.


Highlights of meeting with Iran delegation:

Yesterday, Iranian delegation visited India, where they discussed the nuclear deal and Iran-India relation. Iran has asked India to take sovereign decision without coming under pressure based on false propaganda.

  • Trade and commerce:
    • Both sides reviewed and positively assessed the progress in implementation of earlier decisions taken during Head of State visit, especially for enhancing connectivity and strengthening cooperation in trade and economic issues and in the promotion of people-to-people exchanges.
    • It was agreed to maintain the momentum of mutually beneficial multifaceted bilateral cooperation and exchanges between the two sides.
  • Rupee-Rial mechanism: Indian and Iranian officials have already indicated that they will use the Rupee-Rial mechanism initiated in 2012, which allows India to import oil and pay through a special fund that allows Iran to import food and other goods from India in return.
  • Chabahar port:
    • Officials also discounted any impact of the U.S. sanctions on India’s investment in Chabahar’s Shahid Beheshti port, where it has committed $85 million on current construction, and a total of $500 million on the project including railway lines.
    • In 2012 the U.S. had given Indian investment a carve-out, but has not yet indicated any waiver for the project in the current round of sanctions which including ports and shipping sectors.
  • Both sides had discussed issues that have arisen over the Joint Comprehensive Plan of Action (JCPOA).
  • Support from EU: Iranian diplomats are also hopeful that European countries who had taken part in the previous round of sanctions in 2012 will not enforce them this time around, freeing the way for Indian small and medium companies who are not dealing with the United States for now.


Way forward:

  • After meeting, it is expected that India and Iran will continue their cooperation despite the U.S. threats.
  • External Affairs Minister SushmaSwaraj will also travel to Tehran for the next Joint Commission meeting, which is the month U.S. sanctions on energy trade would go into effect.
  • After this meeting a senior U.S. team is visiting India where the U.S. will discuss its demand for compliance with sanctions to isolate Iran. It is expected that Indian officials will tell the U.S. that zeroing out imports from Iran may not be an option.

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