PM’s visit to Iran has special significance

Prime Minister Narendra Modi’s visit to Iran later this month has special significance in strengthening India’s west Asia policy in the wake of the withdrawal of the sanctions against Teheran by the western powers headed by the USA. Iran is now an active regional player and in the emerging geopolitical scenario, Iran is seeking to play an increasingly important role in collaboration with China, Russia, and also with India. Modi is set to make use of his visit to build a strategic relationship with Iran which will cover both energy collaboration and regional security.

 The PM’s visit has been preceded by the visits of External Affairs Minister Sushma Swaraj and Petroleum Minister Dharmendra Pradhan. Swaraj held discussions with the senior Iranian leaders and the basis for PM’s visit was laid at that time. Iranian leaders were not happy that Modi visited Saudi Arabia and UAE earlier and did not choose Teheran before those countries. 

Iran has emerged  to be very crucial for India in relation to Afghanistan, and India can ill afford to hit sentiments of Teheran since so much vast energy potential lies untapped between the two countries. Prime Minister is, therefore, going to Teheran with a package of economic proposals which should be attractive to Iranian leaders who are itching to induct foreign investment in their vast oil fields.

 In India-Iran bilateral relations, energy is the key area and Iran is on an expansion spree after the end of the sanctions. The Iranian government has opened up oil fields to overseas investors and India has been in touch with Teheran for some of the rich oil assets for quite some time. ONGC Videsh Ltd-led consortium had discovered the Farzad-B offshore gas fields in 2008 but the negations could not proceed earlier due to sanctions. 

Now further negotiations had been held and the Indian Minister for Petroleum Dharmendra Pradhan during his visit to Teheran in April this year followed up the negotiations and requested the Iranian government to speed up the process of finalisation. Iran is equally interested but there are differences on a few issues. Indian officials are in touch with the Iranian petroleum ministry and efforts are on to agree on an agreement on Farzad-B gas fields to be signed during PM Modi’s visit. Even if the agreement is not made ready by that time, there is a possibility that both leaders will express their intention to collaborate on the production in these oil fields. India has also identified few other oil fields which have huge potential. Negotiations are on at the official-level and efforts will be made to speed up the process so that a positive picture emerges before the PM visit.

 For Teheran, the highly positive development is that the banks and the Indian oil companies have reached an understanding on paying Iran US$6.5 billion dues for oil purchased during sanctions period. The payment will be made in euros and accordingly, Indian officials are finalising arrangements on the basis of discussions with the Iranian banks. The Reserve Bank has already cleared the draft for a new mode of payment prepared by the Indian officials and this has been reportedly given approval by the Iranian authorities. Now only the Iranians will identify their banks for getting the payment.

 The issue of combating terror in the context of activities in Afghanistan and Pakistan is also figuring on the agenda for discussions. India is fully alert to the latest foreign policy initiatives of new Iranian regime under which Iran is trying to take along other countries like Pakistan, China, and Russia, apart from India to look after its national interests. Investments in oil and gas require Iran to pass a new law which will liberalise the rule for the participation of the foreign countries in the extraction of gas and oil. The US has still retained many financial penalties keeping riders with Iranian actions to combat terror and abuse of human rights.

 The US administration may make use of these clauses to hit at Iranian economy. Iran wants to expand its economy now and it seeks the support of the countries like China, Russia, and India in making a success of this programme. Prime Minister Modi is aware of this stance of Iran and he will make all efforts to persuade the Iranian leaders to the Indian proposals which open up vast opportunities for the expansion of energy and connectivity in the region.

 The Indian side has emphasised on expanding connectivity in its relationship with Iran. Talks are on to build a rail link between Chabahar port and Zahedan in Iran that will link India with rest of Iran’s network. A team from IRCON had already discussed the details of the rail projects in Teheran in the last week of April this year and the report has been given to the PMO so that the issue can be taken up at the Teheran summit. 

IRCON proposal recommends supplying US$ 400 million of steel rails for expanding the network in Iran. India is also interested in going ahead with the work on International North-South Transport Corridor of which India, Iran and Russia are signatories.