India welcomes Iran deal, wary of implications

India has hopes of strengthening economic engagement with Iran which, despite good intentions and close political ties, had ground to a halt over sanctions.

July 15, 2015 01:59 am | Updated November 17, 2021 02:08 am IST - NEW DELHI:

India “welcomed the successful conclusion of negotiations on the Iranian nuclear issue”, between Iran and the Europe 3+3 (U.S., Russia and China) and the U.N. atomic energy agency IAEA. New Delhi however, struck a note of caution to say it would “wait to see the text of the agreement.”

“India has always maintained that the issue should be resolved peacefully through dialogue by respecting Iran’s right to peaceful uses of nuclear energy while upholding the international community’s strong interest in the exclusively peaceful nature of Iran’s nuclear programme,” the MEA spokesperson said in response to questions shortly after the announcement in Vienna on Tuesday.

Experts said India had several reasons to be optimistic of the benefits of the deal. To begin with, the announcement of the breakthrough comes a day after Prime Minister Narendra Modi returned from his visit to Central Asia and the BRICS/SCO summit, where he met with Iranian President Rouhani, and discussed furthering connectivity through Iran to Central Asia. “Prime Minister Narendra Modi has come back with a firm conviction in the opportunities that the opening of the International North-South transport corridor [from India to Central Asia] will give,” a senior official said.

According to sources, Mr. Modi and President Rouhani discussed several issues “in the full expectation of the nuclear deal being announced.” “PM and President Rouhani had an excellent meeting recently on the sidelines of the SCO Summit in Ufa. Issues of energy cooperation and connectivity were discussed,” the MEA said.

Secondly, India has hopes of strengthening economic engagement with Iran which, despite good intentions and close political ties, had ground to a halt over sanctions.

India and Iran have an annual bilateral trade of about $14 billion, with an extremely high balance of trade problem, as India has been unable to pay Iran about $8.8 billion for oil due to sanctions, according to Commerce Ministry figures.

The government has also had to bow to U.S. and international pressure on cutting its oil imports from Iran, and in March 2015 halted oil imports altogether for the first time in more than a decade in order to keep its international commitments.

Once sanctions are lifted, not only will oil imports from Iran be regularised, they will be cheaper owing to Iran’s estimated added production of at least 500,000 barrels of oil per day (by next year). Moreover, banking and insurance procedures with Iran will also ease and India’s current concerns over the lack of access to Afghanistan could also be resolved by the opening of the route via Iran’s Chabahar port instead of Karachi.

N-arms race

However, senior officials and analysts remained concerned about some of the other outcomes of the deal, particularly in the strategic sphere. To begin with, they said, the lifting of sanctions on Iran could see a backlash from rivals Saudi Arabia, that had hinted in the past months that it would try and “match Iran’s nuclear capabilities” if the deal went through. Indian experts believe this could mean closer cooperation with Pakistan.

India will also have to balance its support for Iran with its mushrooming ties with Israel that has taken a very strong position against the deal, with Premier Benjamin Netanyahu calling it a “mistake of historic proportions.” “Iran’s entry into the regional system is bound to ruffle the Arab monarchies and Israel, but I believe the downside scenarios of a heightened arms race and a destabilized West Asia are highly exaggerated,” said King’s college scholar Zorawar Daulet Singh.

Finally, there is the concern that once Iran opens up its economy, it may not give India preferential treatment, as Russia and China have been stronger supporters, and Europe and U.S. may offer better technology and opportunities. “India has always opposed boxing Iran into a corner. Now that it could be ‘unboxed’ and unshackled, we must look not just at the obvious economic benefits for India, but also the geostrategic implications of the deal,” a senior official told The Hindu.

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