The future of Indo-Iran ties

Asad Mirza
With a new President, Masoud Pezeshkian, in office in Iran, questions are being asked about the future course of Indo-Iran bilateral. However, no reset should be expected as both countries understand the need to stand together and bilateral ties have indeed consolidated during the recent past, under Modi 3.0.
Reformist candidate Masoud Pezeshkian has won Iran’s runoff presidential election, beating hardliner Saeed Jalili by promising to reach out to the West and ease enforcement on the country’s mandatory headscarf law after years of sanctions and protests squeezing the Islamic Republic.
Pezeshkian promised no radical changes to Iran’s Shia theocracy in his campaign and long has held the supreme leader, Ayatollah Ali Khamenei, as the final arbiter of all matters of state. But an Iranian government still largely held by hardliners will challenge even Pezeshkian’s modest aims.
The late president, Ebrahim Raisi, who died in a helicopter crash in May 2024, was seen as a protégé of Khamenei and a potential successor as supreme leader. While Khamenei remains the final decision-maker on matters of state, whichever man ends up winning the presidency could bend the country’s foreign policy towards either confrontation or collaboration with the West, on which the whole edifice of Iranian diplomacy rests.
Though, in most countries presidents are usually the final authority in their capacity as heads of state or government – or both – that’s not the case in Iran. It is the Supreme Leader, who is the final authority in Iran and sets the domestic and foreign policies of the country and makes all key decisions. Thus, one may wonder if the presidential elections are a mere ruse and the president’s office a mere token. However, the reality is quite complicated.
In reality, the president is not a mere decorated mechanical bureaucrat. A president and his minister’s still have the crucial executive role and the manner in which they implement the policies and enforce the decisions plays a major role in the outcomes these policies and decisions produce.
As a result, while rules like the mandatory wearing of hijab for females in public will not be revoked, the implementation under Pezeshkian is expected to be much more humane and incidents like the custodial killing of Mahsa Amini, which triggered months long protests across Iran, are expected to be checked. And it is this background that we’ll have to see future of the Indo-Iran ties under President Pezeshkian.
Quite interestingly, Four polling stations were set up in India – Delhi, Mumbai, Pune, Hyderabad – to facilitate the over 3000 Iranian population to come out and vote in the elections.
At a practical level bilateral ties between the two countries have remained cordial and even trade has seen an upswing. India-Iran bilateral trade during the FY 2022-23 was $2.33 billion, registering a growth of 21.76% YOY. During the period, India’s export to Iran was $1.66 billion (a growth of 14.34%) and India’s import from Iran was $ 672.12 million (a growth of 45.05%).
Indian Support to Iran
The strong ties are further demonstrated by the manner in which the Indian government used its good offices recently to get Iran a membership berth at BRICS and the manner in which it is going full steam ahead with developing the Chabahar Port in Iran.
There is enormous appreciation among Iranian intellectuals, diplomats and politicians regarding PM Modi’s stellar support for their country’s membership of the BRICS grouping. Modi played a key role to navigate Iran’s membership purposively at the BRICS Summit in Johannesburg last August.
Allegedly, the defining moment was a phone call from the Iranian President late Ibrahim Raisi to Modi in the week before the summit meeting. However, the ground for the last-minute flurry of diplomatic activity was prepared in the preceding weeks by the National Security Advisor Ajit Doval when he attended the meeting of BRICS national security advisors in Johannesburg in late July 2023, just weeks prior to the summit to review security and economic cooperation.
Further, Tehran visualises that in the downstream of Chabahar Port, Indian trade and industry can and should enter the hinterland in a big way via trade, investments and project exports. The Iranian side feels that Chabahar has the potential to elevate India’s partnership with Iran to an altogether higher strategic level.
Chabahar Project
On May 13, 2024, India signed a 10-year agreement with Iran to develop and operate the Shahid Beheshti terminal of Iran’s strategic Chabahar port. The new agreement follows a previously promised Indian investment in 2016 of a potential $500 million. It comes after multiple failures to fully implement a previous deal concluded in May 2016 to develop two terminals and five berths at Chabahar port to transport goods and gas from Central Asia to India and handle other international cargo.
PM Modi travelled to Iran in 2016 to conclude the original Chabahar Agreement, also signing an international transport and transit corridor deal Tehran drafted to expand port infrastructure. But US-led sanctions on Tehran forced New Delhi to call for a temporary halt. India eventually managed to negotiate an agreement with the United States to allow Indian investments in the port.
In 2018, Washington agreed to issue sanctions exemptions to enable India to use Chabahar to trade with land-locked Afghanistan for humanitarian purposes. But progress in developing Chabahar continued to be delayed by sanctions.
By March 2023, Tehran called on India to use Chabahar port for mutually beneficial trade, including Indian imports of Iranian oil, which New Delhi suspended after the United States declined to extend sanctions waivers.
The latest agreement in May, signed by Indian Ports Global Ltd. and Iran’s Port and Maritime Organisation, is narrowly focused on expanding the Shahid Beheshti terminal, with a $120 million investment from Indian Ports Global and a credit window of $250 million, thereby enabling New Delhi to avoid financially overcommitting to the project. Though, following the signing of the agreement, the United States suggested India could face sanctions for business deals with Iran and India has not yet responded to these threats.
As far as the future of Indo-Iran ties is expected, a positive indication of that was recently given by the Iranian Ambassador to India, Iraj Elahi, in a newspaper interview, said that, there would be no change in the foreign policy between Iran and India, irrespective of who comes to power. There is unlikely to be any change in the foreign policy, which is led by the Supreme Leader and different bodies of high-ranking politicians, adding that a large segment of Iranians feel that even if they were to reconnect with the West, sanctions would be imposed again on some pretext or the other.
(The author is a Delhi-based senior political and international affairs commentator.)