Alwaght- Iran's strategy that in recent years was built on "pivot to the East" doctrine motivates the administration of President Sayyed Ibrahim Raeisi to work more than ever for expansion of relations with the Asian countries. To this end, Foreign Minister Hussein Amir-Abdollahian of Iran visited India on Wednesday for strategic talks with senior Indian officials.
During the visit, made at the official invitation of the Indian Foreign Minister Subrahmanyam Jaishankar, in addition to talks with the Indian officials Amir-Abdollahian visited Mumbai and Hyderabad. He also talked to the Indian religious leaders, local officials, and Iranian businesspeople there.
Iranian oil exports to India a top priority
Having in mind that in the past decade India was the major Iranian oil importer after China, energy makes a major part of the Iranian-Indian ties. As Iran's oil supply to international markets has increased in recent months, Tehran is trying to sell more oil to India by developing relations with it. This is despite the fact that after the start of the war in Ukraine, due to Western sanctions against Russia, the Moscow's oil prices have fallen and the Indian government has been steadily increasing its purchases from Moscow and using substantial discounts. Therefore, Iran is trying to maintain its second oil purchaser in order for India to continue buying its oil like in the past.
Until 2018, Iran was the second largest oil supplier to India but the US reinstated the anti-Iranian sanctions after withdrawal from the 2015 nuclear deal under Trump, heavily forcing down the Iranian oil exports. The sanctions even sometimes zeroed the Indian oil imports and New Delhi resorted to alternatives, among them Iraq that still meets part of Indian oil needs.
Data show that India's crude oil imports from Iraq have increased since early 2022, reaching a peak of about 1.3 million barrels per day and accounting for about 28 percent of total oil imports of Asia's third largest economy.
Iran's oil is economical to India because of proximity and, therefore, the Indian officials are counting the hours for Iranian oil return to the global markets.
India has reportedly been under financial pressure from high crude oil prices, and its refineries hope for a faster return of Iranian crude to patch up things rather than turn to Russian crude despite offering discounts, as many of these refineries are not customized for processing Russian oil on a large scale. Buying large number of cheap Russian shipments may not be wise, many Indian refineries think. Most of refineries consider fuel plans as well as linear programming models before significantly shifting their oil compositions.
Although India has increased oil imports from Russia in recent months, this amount is much lower than buying oil from the Persian Gulf countries. As India's oil minister acknowledged two months ago, the country needs a total of 5 million barrels per day of crude oil, about 60 percent of which comes from the Persian Gulf and only 2 percent from Russia.
Although Europe sanctioned Russian oil and Moscow vowed to find new buyers, it should be taken into consideration that a considerable part of the Russian oil supplies to Europe go through pipelines, and shifting the pipelines to Asia takes costly infrastructure with long years to construct. Therefore, India will face many difficulties meeting its oil needs through Russia, and in the current situation, Iran is the closest and most economical supplier for it. Indian officials are well aware of this issue. In their meetings with the Indians, the Iranians try to regain the Indian market and ship large amounts of oil to this country should the US ban end.
India's energy needs have increased due to rapid economic growth, rising middle class, and growing purchases of vehicles. The International Energy Agency predicts that by 2040, India will consume a quarter of the world's energy production, and so, Iran can meet much of India's energy needs prospectively. Indian refineries have traditionally been major buyers of Iranian oil and announced their readiness to resume massive imports from Iran if an agreement is reached to revive the nuclear agreement, officially called Joint Comprehensive Plan of Action (JCPOA). Because the refineries already host Iranian crude oil, there is no need for them to test Iranian oil at their facilities or do adjustments, and oil purchases from Iran can be arranged quickly. The fact that Indian officials have several times persuaded the Americans to exempt them from Iran oil ban in recent years shows that Iranian oil is of particular importance to them and oil can flow back to New Delhi immediately sanctions are lifted.
Like China, India has not cut Iranian oil imports under the ban and continued the purchases, though in limited amounts as it does not want to forsake this profitable oil. Presently, it is waiting for a conclusion to the Iranian-Western negotiations for nuclear accord revival and would be fast to resume imports if sanctions are lifted.
Although India in the past, due to its extensive relations with the US, was in line with Washington's policies in the region and the world, in recent years it has pursued more independent policies that are relatively not in line with the American plans and strategies. India, like China, has come to believe that national and economic interests are a priority for it in Iran-West confrontation and defines it relations with other countries on the basis of national interests, not on the wishes of the West. Therefore, due to economic expansion, it will take more independent positions in the future, and the deepening of economic relations with Iran is part of this approach.
Considerable Iranian-Indian trade volume
In addition to oil, Iran's ties with India have other areas as their products complement each other. Just three years ago, oil was the paramount product in their trade, but now a wide range of goods are traded by the two countries, each product meeting the needs of the other's market. According to the latest statistics of the Indian ministry of commerce, the trade volume with Iran in 2018 reached the highest level of $17 billion. However, with the return of US sanctions and declining purchases of Iranian oil and petrochemical products, bilateral trade relations fell to $2.106 billion in 2020.
Also, the two countries embarked on a range of measures to expand trade and remove limitations. Agreement to settle trade cases, facilitate and accelerate business doing, and signing several cooperation deals are part of these measures. Economic relations between the two countries are so important that a joint chamber of commerce has been established between Tehran and New Delhi.
Their trade relations cover oil, agricultural products, petrochemicals, machinery, and facilities. India invested in strategic parts of Iran, such as the Port of Chabahar, in order to have access to Afghanistan too.
India wants to expand its economic reach to Central Asia and Afghanistan, and considers Chabahar as a gateway to these countries. Iran, on the other hand, is keen to develop this strategic port to broaden economic relations with India.
Economically, Port of Chabahar allows India to set up business ties with Afghanistan, circumventng Pakistan. The development of the port will help implement Iran's North-South Corridor, a trade route connecting northern European countries and Russia through Iran and the Caspian Sea to the countries of the Indian Ocean, southern Persian Gulf, and South Asia. Meanwhile, Chabahar, as a strategic port, can play an important role in this transit route and be a gateway for goods to eastern Iran and Central Asia, and the Indians invested in this port based on these economic and strategic calculations.
Once Iran sanctions are lifted, Indian companies increase activities in the Port of Chabahar and turn the port to a trade hub for Indian Ocean and Sea of Oman regions.
Afghanistan, in addition to business, provides a topic of discussion between Iran and India. With threats from Afghanistan to neighboring states increasing and there are fears of a spillover of insecurity to regional countries, Tehran and New Delhi jointly work for peace in this country. They recently intensified work through regional meetings discussing Afghanistan.
Given the increase in its need for hydrocarbons, India now cares more than ever to secure its energy flow and establish strategic alliances with resource-rich countries. Because of its economic capacities and geographical position, Iran is more attractive to India for energy needs than others, something Indian officials admit. Expanding ties with India is part of Tehran's doctrine of pivot to the East, and Iran can count on India as an emerging economic power for buying its oil and non-oil products.
