Indian Projects in Iran-A Status Update
The current developments have brought the Sino-Indian rivalry to the theatres of West Asia. The news leak of China's strategic agreement worth $400 billion with Tehran for 25 years was soon followed by the announcement of Tehran to go solo on the 628kms Chahbahar-Zahedan railway project in which India has high strategic interests. India even lost the Farzad B gas field in the Persian Gulf last year, when Iran informed New Delhi that it has decided to go ahead with domestic companies over India’s ONGC Videsh Ltd (oversee investment arm of state-owned Oil and Natural gas Corp ONGC).
India is one of the fastest-growing economies with a high requirement for energy. Iran is one of the richest countries in hydrocarbons that could help India fill the deficit in energy requirement and India could reciprocate by providing a huge market for Tehran’s resources. The relation between both the nations is mutually benefitted one. Iran’s significance is not just economic rather it is of great strategic importance to India as well. It serves as a gateway to central Asia and is crucial for India's Afghanistan policy. However, because of Iran’s nuclear controversy which led to the imposition of sanctions on Iran by the United States, New Delhi has been balancing its relations with both nations. With the entry of China into the region, it will make the act of balancing furthermore difficult for India.
If one looks at the major current involvement of India in Iran the 3 highlights would be the Chahbahar Port, the Chahbahar-Zahedan railway line Project, and the Farzad B gas field.
Chahbahar Port-Iran sits at a location of great geostrategic and geoeconomics importance. It's not only important for India's oil supply from the gulf but it also of great importance for India's Afghan policy as well as its look west policy. Chahbahar has been the most important and the most successful engagement of India in Iran so far. It provides an opportunity to bypass Pakistan to access the gulf without interruption providing an edge over its neighbors in the region. It was in 2003 when an agreement on a deep-water port was reached, the port is on the Marakan coast in the Sistan-Baluchestan Province of Iran. The international sanctions and bureaucratic sluggishness from both sides took a lot of time for the project to be up and running. However, India's strategic stake was raised with the involvement of China in the Gwadar port (part of China-Pakistan Economic Corridor) which is 170 kilometers to the west of Chahbahar along the coast. The much-needed boost to the project was received in 2016 with the visit of India Prime Minister Narendra Modi to Iran. He announced an investment of $500 million towards the project along with the signing of the tripartite agreement between India-Iran and Afghanistan for an efficient transport corridor for smooth transit of goods and passengers. While the port connects Iran with India via sea it connects Afghanistan through its land border, making it easily accessible for all three nations. The project is of equal importance to Tehran as it helps to develop its first deepwater port, capable of hosting larger ships than the ones that can be hosted by Bandar Abbas port (accounts for more than 80% of Iran’s shipping). It also facilitates development opportunities for one of the least developed provinces of the country and also provides direct access for Tehran to the Indian ocean. The post-sanctions milieu has made it all the more necessary for Iran to attract such foreign investments in the country. Chahbahar being closer to the Indian west coast will help in greater connectivity between central Asia and India and might further help in realizing the North-South Transit Corridor.
If we look at the progress of the project despite the sanctions from the United states the port was operationalized in 2016 and the first phase was finally inaugurated in December 2017. An Indian company is in charge of operations of the port. As per the Ministry of External Affairs as of June 2020, the port carried 82 vessels handling 8,200 containers amounting to 12 lakh tonnes of bulk cargo. Reinstating the importance of the port the Indian Government in the Union Budget for the financial year 20-21 allocated 100 crores for the development of the Port.
Great strategic importance has been rendered to Chabahar from the perspective of India especially since China's involvement in Gwadar. Nevertheless, Iran has stayed away from assigning strategic importance to the port and has always talked about welcoming other countries including China for further development. Amidst US sanctions, and now the direct arrival of China, the balancing act for India has become all the more complex and will have ramifications over India-Iran relations.
Farzad B gas field
In a recent blow to India's engagements in Iran, the Iranian Oil Co informed India's ONGC Videsh Ltd (OVL) last year about concluding a contract with a domestic firm for the development of the Farzad-B gas field. The Farzad-B gas field is a highly rich field holding a reserve of around 21.7 trillion cubic feet. OVL signed the exploration service contract in 2002 along with few other partners. It discovered a gas block that was declared commercially viable in 2008. However, after the expiration of the contract in 2009, OVL submitted a Master Development Plan for the gas field to the Iranian offshore oil company in the year 2011. The negotiations were held until 2012 but didn't come to any conclusion due to certain terms and International sanctions on Iran. Fresh negotiations, though started in 2016, still remain inconclusive. The failed negotiations recently translated into Iran’s decision to develop the field on its own. As per India’s Ministry of External Affairs, in January 2020, India was informed that “in the immediate future, Iran would develop the field on its own and would like to involve India appropriately at a later stage.” India has also maintained that “this matter remains under discussion.
Chahbahar-Zahedan railway line Project.
During the visit of the Indian Prime Minister in 2016, an MoU was signed between Iran's Construction and Development of Transportation (CDTIC) and Indian Railways IRCON to develop the Chahbahar-Zahedan Railway line. The project was one of the prominent markers of India-Iran relations, which aimed at connecting Chahbahar to the capital of Sistan-Baluchestan province, Zahedan which was to be further extended to Zaranj across the border in Afghanistan. The railway link aligns with India's vision to have a direct connecting route with Afghanistan and Central Asia bypassing Pakistan.
Iran has time and often expressed its commitment to a common vision with India for economic integration and development of the region. However, in another strategic blow to India-Iran relations, as per the current media reports, owing to its domestic compulsions and citing delays from the Indian side in funding Iran has decided to go solo on the 628kms Chahbahar-Zahedan railway project. India however has still maintained that both the countries are still engaged in detailed discussions on aspects of the project.
Conclusion
The recent decisions have ignited the debate of whether and if India is losing Iran. But if we look at the developments, the only country that has yielded results for Iran, even in times of tight sanctions from the United States, is India. Iran's closeness with China is a result of long-existing sanctions from the west and a desperate need for an alternative and this partnership is likely to grow. The loss of contracts over railway lines and gas fields can't be seen as the failure of foreign policy for India. India also needs to diversify its relations with other nations in the Arab world beyond Iran. According to C. Raja Mohan “India is no minor economic force in the Arab world, having had a much longer engagement with the region than China. Instead of defining an unrealistic competition with Beijing, Delhi must up its own commercial game in the Arab world”. If we see the trajectory of the relation between India and Iran, there have been lots of ups and downs, despite the traditional relations, there has been an impact of external factors on the bilateral relations of both nations. The relationship with the largest democracy for Iran still holds high ideational values. Nevertheless, an extensive agreement between Iran and China is an issue of major concern for India and will have implications for the bilateral relations between Tehran and New Delhi. The newly elected democratic government in the United States will also have a crucial role to play in the future of India-Iran relations. With the coming of China, the China-US rivalry will also have certain effects on the region and India will have to act according to the changing dynamics in the region.
References
[1] https://iramcenter.org/en/india-iran-relations-a-comprehensive-review/?send_cookie_permissions=OK
[2] https://carnegieindia.org/2020/01/09/india-s-view-on-soleimani-iran-and-united-states-pub-80743
[3] https://carnegieindia.org/2016/05/16/state-of-indian-iranian-relations-event-5273
[4] https://www.jstor.org/stable/48544308?seq=1#metadata_info_tab_contents
[8] https://indianexpress.com/article/explained/explained-in-china-iran-indias-concerns-6511177/
[10] https://www.orfonline.org/expert-speak/the-iran-question-makes-a-comeback/
[11] https://www.orfonline.org/research/on-chabahar-india-must-recover-lost-ground-with-iran-quickly/
[12] https://carnegieindia.org/2018/10/16/diplomatic-blind-spot-pub-77502
[13] https://idsa.in/issuebrief/us-iran-hostilities-challenges-for-india-mmquamar-240519
Pic Courtesy-Siamak at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
