India risks losing new deals with Iran due to ‘unnecessary caution’


Private companies in India are keen to move ahead in the Chahbahar port project but the government has not shown the same level of enthusiasm in the past: Iranian envoy

Abhishek G Bhaya

India runs the risk of losing its ‘goodwill’ advantage in striking new business deals with a post-nuclear pact Iran. This is due to New Delhi’s complex bureaucratic procedures and an ‘unnecessary caution’ that marks its dealings with Tehran, according to Iran’s ambassador to India.

“Following the nuclear deal, Iran has been mainstreamed in international affairs and India should appreciate that to bet on Iran is the right thing.

In the past, India often advised patience on important projects. In the changed circumstances in West Asian region, India cannot follow the policy of patient waiting anymore,” Ambassador Gholamreza Ansari said in his first public statement following the nuclear deal between Iran and western countries that led to the dramatic lifting of decade-old sanctions earlier this month (16 January).

Also read: Sanctions gone, what Iran will do with new cash

“In my three years as the Ambassador of Iran, I have often been advised to be patient on big India-Iran projects. Does India want to wait for centuries before capturing the right opportunities?”

Ansari said in an impassioned speech delivered during a seminar on West Asian affairs in the Indian capital.

As economic sanctions on Iran were lifted on 16 January, India welcomed the move and stressed its intent of strengthening bilateral relations with Tehran. There was an impression that New Delhi, with its ‘civilisational’ ties with Iran, would be ahead of others in bagging new deals.

Also Read: Why lifting of sanctions against Iran is bad news for Israel and IS

An article, jointly authored by Mohandas Pai and Manjeet Kripalani for Mumbai-based think-tank Gateway House stated:

“Iran emerged on to the world stage after 36 years of isolation… India should double up its diplomacy and commercial engagement with the West Asian country and move boldly beyond the curtain of ‘civilisational’ ties. For New Delhi, it is time to put that natural advantage to good commercial use through a vigorous private sector engagement with Tehran.”

Also Read: Has Pakistan seized diplomatic initiative from India in Saudi-Iran row?

According to the article, “the Persian culture is so embedded in the language and culture of India, Iran is hardly a foreign country for us.”

‘Speed up, or lose out’

A week on, that upbeat mood has morphed into caution as New Delhi deliberates whether it may have to pay a high price for lost opportunities, in case Iran turns hawkish on negotiations on economic collaborations delayed by India.

Iranian Ambassador Ansari’s statement gave further credence to such fears. Ansari said that mega projects such as the Chahbahar port upgradation, and international energy pipelines demand prompt Indian decisions.

“I feel private companies in India are keen to move ahead in the Chahbahar port project but the government has not shown the same level of enthusiasm in the past.”

India signed the agreement for building the Chahbahar port on the Persian Gulf in 2003. The Cabinet approved $85 million for the first phase. But nothing has moved, despite Prime Minister Narendra Modi’s promise to Iranian President Hassan Rouhani for swift clearance on the sidelines of BRICS summit in Ufa, Russia in July last year.

Iran’s National Railways signed a deal in 2013 for 250,000 tonnes of rolling stock. The first phase of the transaction should have been completed by now. But Tehran does not know what the last minute hitch is.

Iran, meanwhile, is in haste. It is also looking for partners as it reaches out in aid of its regional allies. “Syria, Iraq and even Egypt need billions of dollars worth investments for reconstruction and recovery from the violent wars.

The region urgently requires inclusive social and political structures. India, which has strong interest in the region, should express its concerns freely,” Ansari said.

He stressed that Iran was the guarantor of stability in the West Asian region and would fight against the forces of instability that are responsible for violent extremism in Iraq, Syria and Libya.

Many believe India needs to act more quickly if it wants a bigger share of Iran’s economy. Indeed, New Delhi must expedite the implementation of ongoing projects. Else, a new and vibrant Iran with the world knocking at its doors will go elsewhere.

Nuclear Deal:
A mixed blessing for India

Iran’s nuclear deal is expected to be a mixed blessing for India, which maintained trade relations with Tehran during the economic and financial restrictions. The deal will likely nudge up crude oil supplies from Tehran but have an adverse impact on India’s farm commodities, as Iran now has a wider market from where to shop.

Prior to the nuclear deal, New Delhi had adopted a rupee-based payment mechanism with Tehran to skirt Western sanctions that prohibited purchases from Iran made in dollars. Under that, India purchased Iranian oil with rupees by depositing the payment in an Indian state-run bank account, funds from which Iran would use to buy Indian goods, including food, drugs, consumer products and auto parts.

The lifting of sanctions would mean India can openly buy oil from Iran. India is Iran’s second biggest oil client after China.

India also has an opportunity to invest in Iran’s vast natural resources. In October, India’s state-run Oil and Natural Gas Corp was in talks with Iranian state company Pars Oil and Gas Co to renegotiate a $10-billion gas project that it abandoned because of US pressure.

Indian exporters of agricultural commodities including sugar, soymeal and barley to Tehran will be adversely affected as Iran is now switching to suppliers from South American countries who are offering the same products at a much lower prices.

The only gainers in the commodities sector look likely to be exporters of aromatic, high-quality basmati rice, of which sales to Iran are expected to rise to 1 million tonnes this year, according to the All India Rice Exporters Association.

The author is a Gulf-based Indian journalist

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