India Iran relations are being reset, though the time may not be considered opportune given that there are a series of sanctions recently imposed on Tehran, the UN (Fourth Round), United States and the European Union (EU) this resumption of intense interaction was inevitable. India Iran relations have been many times called as, “civilisational,” yet there is more to these than diplomatic jargon, witness the many Iranian cafes that dot the landscape of Mumbai, these 24 hours eateries have been there at least a century or more before McDonald or KFC. This proves the maxim that despite the reality of permanent interests geography, legacy and people to people contacts will remain the primary currency of diplomacy in the years ahead. 

Yet there was a period of slide in the Indian engagement of Iran, which as per some was due to insistence of a reset from Washington, which had led to some frostiness in the past few years but the inevitability of reality in the region has once again brought the two countries together. 

The 16th Session of the Joint Commission between India and Iran is thus regarded as a seminal event in this renewed contact and was held in New Delhi on July 8-9, 2010. The India Iran joint commission was thus a good opportunity for both the countries to strengthen their economic relations despite the problems of sanctions. India and Iran have been holding discussions at regular intervals on issues relating to economic cooperation under the aegis of the Joint Commission mechanism, which was established in July 1983. The last session of the Joint Commission was held in Tehran from October 30-November 2, 2008 therefore there is legacy and continuity and the Iranian delegation has been accorded considerable priority in the country. 

During his two-day visit to India, Mr Hosseini head of the Iranian delegation has met with Indian Prime Minister Manmohan Singh, Finance Minister Pranab Mukherjee, and National Security Advisor Shivshankar Menon. This interaction will add to the tempo of build up in relations with Iran. A bilateral investment protection agreement isd also in the offing and would add to the overall positive mood now developing in the country and will have to be progressively sustained. 

Though the time is certainly not very opportune. Opening of talks between India and Iran has come when the US and the West are battling Iran over the nuclear issue. While UN and EU sanctions are not likely to impact economic relations the US sanctions also proscribe companies from other countries who are doing business with Iran thereby this would be a major stumbling block for India’s private sector to invest or trade with Iran. Faced with a Hobson’s choice the major Indian companies as Reliance industries is likely to bow to US wishes, with major investments in the American energy sector also in the offing. Since Indian investments in Iran would be primarily driven by private sector apart from the oil majors who are in the public sector, how these issues will be parsed will remain to be seen. Or is India attempting to play friends with an isolated Iran is another issue that would have to be given some consideration.

However a closer look at the agreements signed by the Joint Commission would indicate that India and Iran have been careful in ensuring that major compacts are in those fields which may not fall in the purview of the sanctions including those by the EU. The non conventional energy and small scale industries as well as paper and pulp agreements would not be objected and would be internationally permissible. However significantly, for India, agreements aside, Iran has also agreed to hold technical-level meeting over the issue of Chabahar port, which is strategically important for New Delhi. The port can serve as an entry point for India's outreach in both Afghanistan and Central Asia. This could be seen as a major take away from the meeting for with Pakistan having blocked the land route to Afghanistan, Chabahar port provides the viable option for opening trade with Iran.

Amongst the many issues between India and Iran energy transshipment is one of the primary ones and as Iran has surplus resources of gas and oil while India has developed large capacity refining capacity particularly the Reliance refinery in Jamnagar there is considerable synergy that can be achieved. Of the two projects on the drawing board, the Iran Pakistan India pipeline has already been signed by Iran and Pakistan with India hedging its bets due to pricing factors while the other pipeline project reportedly discussed by India and Iran during the two-day 16th Joint Commission is the underwater one which bypasses a troubled Pakistan and would be a direct link from Iran to India. The technical feasibility of the same will have to be reassessed as in a previous study this was not found viable but now with energy as well as submarine technology having gained traction, there is hope of activating this route as well. These multiple vectors will no doubt enhance the scope for India’s relations with Iran.

So next time you are in Mumbai do not forget to have a cup of tea in an Iranian café, that would be one of the best, “chai” you will get in any Indian restaurant.