PM Narendra Modi's Iran visit aims to firm up political, commercial ties

Prime Minister Narendra Modi is heading to Iran on Sunday on a two-day visit, a country many believe he should have travelled to earlier. "He left it too late. But better late than never," said KC Singh, a former Indian ambassador to Iran. Chinese President Xi Jinping was in Tehran earlier in January, one of the first major world leaders to visit Iran after the crippling sanctions were lifted.

Many Iranians tend to agree with Ambassador Singh. Though they are not referring to the Prime Minister’s visit. They say that unlike businessmen and corporates from Europe, who have rushed to Tehran following the lifting of sanctions, Indians have been slack. Yet it is also true that the formalities of lifting financial sanctions take time and even now many European banks are hesitant to get into gear. Recently US secretary of state John Kerry had to remind these banks that Iran is no longer under sanctions.

Prime Minister Narendra Modi. Getty Images

Prime Minister Narendra Modi. Getty Images

India and Iran had in the past decade signed several MOU’s but because of the sanctions regime, there has been no progress. Despite Iran and India constantly emphasising civilisational links and traditional links, nothing much has moved on the ground. India’s Shia Muslim community, spread mainly across UP’s awadh area, has always had close links with Iran and people continue to visit the holy shrines there.

India’s political relations with Iran has also had its share of problems. Tehran will not forget that "old friend" India voted not once but twice against Iran at the IAEA when it was in the negotiating the civil nuclear deal with the US. Iran has moved on but not forgotten and remains wary of New Delhi, especially as India appears to be moving closer to the US.

But India is hoping that Narendra Modi’s visit will give a push to several long pending projects and give a push to accelerate both political and commercial ties. According to Gopal Bagley, joint secretary in charge of Pakistan, Iran and Afghanistan in the MEA, the Prime Minister will give a "timely impetus" to the both the energy and connectivity projects.

The Prime Minister will be meeting with Iran's Grand Ayotollah Sayyid Ali Hosseini Khamenei, the most powerful man in the country on Monday.

Modi will also hold bilateral talks with moderate pro-reformist President Hassan Rouhani. The talks will cover bilateral relations and the situation in the region as well as global issues. Afghanistan, and the growing clout of the Taliban in that country is becoming a major worry for both India and Iran. At the time when Taliban was in power in Kabul, India, Iran and Russia together backed the Northern Alliance. Stability in Afghanistan is a major concern for both countries.

The Shia-Sunni conflict in West Asia is changing the entire dynamics of the region. This has resulted both in the Syria quagmire as well as the current war in Yemen. Shia Iran is pitted against Sunni Saudi Arabia, Qatar, Turkey and UAE. The Sunni powers had tried their best to scuttle the nuclear agreement and the lifting of sanctions. But for energy hungry India and China, the thrust has been on balancing relations with both countries. When Chinese President visited Iran, he also visited Saudi Arabia and Egypt. Prime Minister Narendra Modi has already visited UAE and Saudi Arabia. On his way to Washington next month, Modi will also make an official trip to Qatar. India has always managed to do the tight rope walk and will ensure that its relations with Saudi Arabia and the rest of the Gulf Co-operation Countries (GCC) will be excellent, while it will also take advantage of the opening-up of Iran.

The focus of Prime Minister’s visit will be connectivity, infrastructure and boosting bilateral trade, and giving the India-Iran relations a solid commercial edge. The development of the Chabahar port, which has been on the anvil since 2003, will finally see some forward movement. Chabahar, located at the mouth of the Straits of Hormuz in the Persian Gulf way, is to be developed as a regional hub. But because of the sanctions against Iran, getting the project going was tough. During Modi’s visit, the commercial contract between Indian Ports Global privat Ltd and Arya Banader of Iran, for investments in the Chabahar Port Phase 1 will be signed.

Last year in May, minister for Shipping and Road Transport, Nitin Gadkari signed a memorandum of understanding with Iran for building two terminals and five berths in the Chabahar port. India’s investment in the first phase would be around two million dollars. During his visit to Iran Gadkari had made it clear that India was keen to invest in the Chabahar Free Trade Zone.

A trilateral agreement using Chabahar-Zahedan-Zaraj will be signed between Iran, India and Afghanistan. India’s interest in Chabahar port was because of Pakistan's refusal to allow Indian goods transit through its territory to Afghanistan. Delhi believed that sending good by ship to the Chahabar and sending it across by rail and road from there to Afghanistan would be a way to get out of the problem. India has already spent about USD 100 million to construct a 218 km long (140-mile) road from Delaram in western Afghanistan to Zaranj in the Iran-Afghan border to link up with Chabahar port.

India is hoping to reach its goods not just to Afghanistan but to Central Asia as well through this route. This is the reason that Delhi had always been keen on investing in Chabahar. The first MOU on Chabahar was signed when the NDA government was in power. Iran is hoping that with another BJP government in Delhi, the projects would now take off. The Modi government is also showing much more initiative.

India laid the groundwork for the Modi’s visit, with an earlier trip by Gadkari, oil minister Dharmendra Pradhan and external affairs minister Sushma Swaraj. The Prime Minsiter will push for Indian business in the FTZ and railway projects in Iran. The initial agreement for exploration and development of Farzad B gas field was signed with a consortium of three Indian state companies as early as 2000 but is only now in the process of getting activated. During Pradhan’s trip to Iran, he offered to invest up to $20 billion in oil, petrochemicals and fertiliser projects in joint ventures with Iran if Tehran provides land and gas at concessional rates. There is likely to be a push in this direction.

Updated Date: May 22, 2016 15:41 PM

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