What are the challenges and limitations in India-Iran relations? (2023, 15 Marks)
India and Iran share a civilisational inheritance and one interest nothing else can replace: Iran is India’s only route to Afghanistan and Central Asia that avoids Pakistan. Yet the partnership of the Tehran (2001) and New Delhi (2003) Declarations has under-delivered. Harsh V. Pant asked in 2004 whether the two were forming a strategic “axis” (Asian Survey); two decades on, plainly not. The causes are partly external challenges and partly internal limitations.
External challenges: a relationship shaped by third parties
- The American constraint. Sanctions block oil purchases, banking, shipping and insurance. India’s IAEA votes against Iran (September 2005, February 2006), cast while the civil nuclear deal moved through Washington, still colour Iranian views. The oil waiver lapsed on 2 May 2019; Chabahar’s exemption was revoked in September 2025 and a conditional waiver lapsed on 26 April 2026. In January 2026 Washington threatened a 25% tariff on any country trading with Iran.
- West Asian polarisation. India’s partnerships with Israel, Saudi Arabia and the UAE are read in Tehran as alignment. The US–Israeli war on Iran from 28 February 2026 began two days after Prime Minister Narendra Modi’s visit to Israel, while India still needed Iranian goodwill to move cargo through Hormuz.
- China and Russia. Iran’s 25-year cooperation agreement with China (March 2021) and its SCO (2023) and BRICS (2024) membership give Tehran patrons indifferent to secondary sanctions. China’s Gwadar, about 140 km from Chabahar, dilutes Indian leverage.
- Pakistan. Tehran’s pan-Islamic posture tilts it towards Islamabad on Kashmir, and Pakistan, not India, mediated the April 2026 ceasefire.
Limitations within the relationship
- A thin economic base. Trade has fallen from about US$17 billion in 2018–19, when oil flowed, to US$1.68 billion in 2024–25, mostly Indian rice, tea and medicines.
- An implementation gap. The 2016 Chabahar package was never fully delivered, the Chabahar–Zahedan railway stalled, and Farzad-B, discovered by an ONGC Videsh-led consortium in 2008, went to an Iranian firm in 2021. The Union Budget of February 2026 carried no Chabahar allocation for the first time in nearly a decade.
- Divergent threat perceptions. India’s adversaries are Pakistan and China; Iran’s are the US, Israel and, intermittently, Saudi Arabia. They converge only episodically, as on Afghanistan.
- Ideology and domestic sensitivities. Ali Khamenei’s remarks on Indian Muslims (2020, September 2024) drew blunt rebuttals from the Ministry of External Affairs. The wartime succession of Mojtaba Khamenei (March 2026) adds unpredictability.
Assessment
A structural realist reading in the tradition of Kenneth N. Waltz treats India’s Iran policy as dependent on its far larger stake in the United States. Yet hedging has kept options open: India was on Iran’s permitted list for Hormuz transit in March 2026, Indian Oil bought its first Iranian cargo since 2019 that April, and India paid its US$120 million Chabahar equipment commitment in February 2026.
Conclusion
The relationship is deep in culture, thin in convergence and hostage to decisions taken elsewhere. Its realistic future is compartmentalised engagement: keep Chabahar and the INSTC as long-term assets, build sanction-proof rupee settlement, and preserve political trust until circumstances permit more.