WHAT WILL BE THE IMPACT OF US- IRAN CONFLICT ON INDIA?
India imports oil from Iran
Last year, India was regarded as Iran’s second-largest buyer of oil, Tehran being the third largest exporter of oil to India. The US announced the cancellation of sanction waiver leaving India forced to stop importing oil from Iran. Noting that India does not necessarily rely on Iranian oil, this import layoff comes to India at a significant cost. Importing oil from Iran was convenient in terms of finances as well as of geography.
Also, this disrupts the dynamic relationship between India and Iran. Iran plays a crucial part in providing India with access to Central Asia and Europe bypassing Pakistan altogether.
Experts believe that India is going to need to balance its inclinations and approach towards Iran and the US because there is no denying that India’s interests lie in both countries.
Chabahar project
Located in the Indian Ocean in Sistan and Baluchistan province of Iran, Chabahar port’s project was supposed to open gates to golden opportunities for trade among India, Iran, Afghanistan, and other central Asian countries. Though the sanctions by the US do not cover prohibiting any development of this project but considering limited trade from Iran, the Chabahar is likely to be a ‘ghost-port’. Overall, this will hurt India’s economic as well as strategic issues.
Though India has started importing oil and gas from the US, it has displayed a deep aversion to newly formed trade-routes built by China under its RBI scheme. The recently concluded for the same forum marked absence of representatives from India.
India has shown its inclination towards the matters getting resolved through “peacefully and through dialogue”.
Indians living in West Asia
An Indian Express report stated that over 8 million Indian migrants stay and work in West Asia. Due to potentially rising tensions between Iran and India, these people could also be affected if, in any case, conflicts arise in the region.
Listing of Masood Azhar
We cannot ignore that the US hypothetically indebted India by listing Masood Azhar as a global terrorist. Experts say that this move by the US is in lieu of expecting India to reciprocate the impact on Iran.
What India could do
India has basically two options.
One is to go back to buying oil from Iran through informal agreement(s). These agreements can be,
- Devising a Rupee payment mechanism, instead of Dollar payment. This would eradicate the sanctions.
- Allying with the EU, Russia, and China through INSTEX mechanism
- Teaming up with an SCO (Shanghai Cooperation Organisation)
The issue in adopting any of these is that it would disrupt India’s multifaceted relations with the US which may lead to Trump administration acting against these actions.
The second and much feasible option is to keep negotiating with the US for either securing a formal waiver or for having an informal understanding to let buy oil from Iran. But the issue here is, Trump administration firmly maintains that there is no need for any nation to depend on Iran for oil as the international market has enough of it.
What India can do to maintain the Chabahar Port project is it can offer Iran to enhance its investments in the project. Additionally, India can initiate various developmental as well as connectivity projects with other related countries like Afghanistan, the Caucasus, and Central Asia. This will not put India under a bad light in the eyes of the US administration. And, it will also let India make sure its relations with Iran are not completely disrupted.
Conclusion Logically, India can wait to buy oils from Iran until the water gets under the bridge. However, to undermine its relationship with a world power like the US is not a very feasible option for India, right now.