India needs to protect its interests Amid the Iran row

India and Iran enjoy close bilateral commercial relations in trade and investment that are based on mutual benefits and respect. Iran is the second-largest oil producing country and India the second largest importer country of its crude, accounting for its 20 per cent export. This makes the oil market a strategic trade linkage between the two nations.

India imported about 22 million tonne of crude oil valued at about $ 10 billion in 2009-10 fiscal. India-Iran trade in 2009-10 was $13.4 billion (Indian exports $1.9 billion and imports $11.5 billion). India’s exports to Iran include petroleum products, rice, machinery and instruments, manufactures of metals, primary and semi-finished iron and steel, drugs/pharmaceuticals & fine chemicals, processed minerals, manmade yarn & fabrics, tea, organic/inorganic/agro chemicals, rubber manufactured products, etc. Natural gas is also among the potential area of cooperation between the countries, therefore, Indian government is trying to ensure import of natural gas through transnational gas pipelines, including from Iran through the Iran-Pakistan-India Gas Pipeline Project which is estimated to cost around $7 billion.

Various important issues – such as pricing of gas, its delivery point, project structure, payment of transportation tariff and transit fees for passage of natural gas through Pakistan, security of supply, etc. – are under discussion amongst the participating countries.

Despite these issues, it is also widely considered that India is not keen to give suggest that it would cooperate with Iran in setting up of joint gas pipeline after the country has made its nuclear ambitions clear. There is also a major dispute about the oil payment, which were earlier routed through the Asian Clearing Union Mechanism. But due to the European Council regulation which came into effect in December 2010, the country required prior authorisation for payments to listed entities of Iran. Hence, payments to Iran were allowed to be settled outside the ACU mechanism. India favour the exchange of goods and barter for oil payment but Iran is not interested in interlinking the payment with goods. Therefore, the government is planning to find a way out to repay the Iran debt through Turkey or Russia. India paid its $5 billion oil arrears to Iran last year.

Diplomatic relations were jolted after India voted against Iran in the International Atomic Energy Agency in 2005. However, the vote is considered coerced under pressure of International lobbyist against Iran. India says that it believes every country has the right to acquire the nuclear energy for the peaceful uses, including Iran if it uses the nuclear energy as per the international obligations as a non-nuclear weapon state under the npt

India has accepted all sanctions imposed by United Nations on Iran but defied the additional sanctions imposed by the US and European Union. In spite of close relations with US, India not halted the purchase of crude oil from Iran. India advocates the dialogue between both the sides without any confrontation. Western countries are consistently putting pressure on major trade partners of Iran, including China, India and Turkey. The move aims to make sure that Iran is isolated internationally.

Recent attack in New Delhi, Thailand and Georgia is also considered a conspiracy to show that Iran supports the terrorism. Targets behind such propaganda might be to derail the Iran’s friendly relations with India and other countries. Iran never prefer to use the soil of its partner country India for beyond border war against Israel as it would worsen the Iran’s bilateral commercial ties with India.

Another development, which support the assumption that Iran might not be involved in the incident is the report that just before a week of New Delhi attack on diplomat, a couple from Israel was caught at Kochi and deported due to their suspicious activities. India’s moderate stand of not confirming any foreign role in the attack until the probe is complete is commendable.

India needs to maintain friendly relations with Israel too as it is one of the major trade partners of India. Israel is the second largest defence equipment supplier and has played a key role in helping India modernise its agriculture. Recent cancellation of the Army Chief General VK Singh’s scheduled visit to Israel in March 2012 is considered as government policy to keep away from Arab-Iran-Israel conflict. India needs to balance its relations with Iran, Arab and western countries and have the strong mutually beneficial policy as a sovereign state in the prevailing international crisis over Iran.

Shafeeq Rahman is a professional researcher on India centric socio, economic and political databases.

Curtsey: Tehelka

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