India and Iran have shared deep civilizational connections rooted in a common heritage, culture, language, and ethnicity. Following India's independence in 1947, both nations fostered friendly relations, formalized by a treaty in 1950. Significant developments include the Tehran Declaration in 2001 and the New Delhi Declaration, which established frameworks for cooperation in trade, energy, education, counterterrorism, and regional connectivity.
Before the imposition of US-led sanctions, Iran was among India's top three suppliers of crude oil, offering favorable trade terms like discounts and extended credit. Indian refiners, such as Mangalore Refinery, were well-equipped to process Iranian crude. However, after 2019, US sanctions halted Indian imports of Iranian oil. India remains open to re-engaging with Iran if conditions become favorable.
India halted crude oil imports from Iran in 2019 following the US decision to end sanction waivers. While some argue that India could have continued importing, as seen with Russia, the nation likely chose not to strain relations with the US. Nevertheless, India has kept the option of resuming Iranian oil imports open, should global conditions allow.
Despite traditionally importing oil, India also exports various goods to Iran, including:
In 2013, India exported goods worth $5.3 billion to Iran, but this declined to $1.24 billion by FY25, mainly due to reduced oil trade and sanctions.
The Chabahar Port project, developed collaboratively with Iran, is crucial for India's strategic ambitions:
This port supports India’s aspirations to build economic connections with Central Asian nations rich in oil, gas, uranium, copper, and aluminum.
Iran's strategic location is vital for India's connectivity plans, especially for trade routes that circumvent Pakistan. India's investment in Chabahar enhances its regional presence, providing a counterweight to Chinese and Pakistani influence. Despite strained US relations, India maintains its interest in Iran, acknowledging its long-term strategic value.
An escalation in the Israel-Iran conflict could impact India's operations or investment in Iran. Nevertheless, India will likely persist in supporting the development of Chabahar and broader bilateral cooperation, carefully balancing US and Middle Eastern sensitivities.
Despite recent setbacks due to sanctions, India remains optimistic about revitalizing oil trade and broader economic cooperation with Iran. The country continues to view Iran as a promising market for Indian exports and a crucial player in its regional infrastructure and energy strategy.
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