Iran has shut the door on India with respect to its Farzad-B gas field after a decade of negotiations. The National Iranian Oil Company signed a $1.7 billion deal for bringing Farzad-B to production with its subsidiary Petropars. This marks the second project that has come undone for India in Iran. Last year, Iran had dropped India from the Chabahar railway link project, which Tehran decided to develop on its own. Needless to say all of this comes against the backdrop of declining commercial relations between India and Iran, thanks to the previous Trump administration’s reimposition of secondary sanctions on Tehran.
After Trump pulled the US out of the Iran nuclear deal, Washington practically forced New Delhi to choose between doing business with Tehran and continuing business-strategic relations with American entities. Of course, India chose the latter and started winding down its oil imports from Iran. It’s quite possible that the Iranians were miffed by India’s position and lost interest in Indian investments. On the other hand, doing business with Iran under the Trump regime had become unappealing for Indian firms as well.
True, the new Biden administration has engaged in indirect talks with Iran to revive the nuclear deal. But the results of those efforts are still unclear. Therefore, India wouldn’t mind losing the Iranian projects at the moment. However, there could be strategic implications down the road. With the US looking to pull out of Afghanistan this year, the situation in that country could turn unstable. In that scenario, India would possibly need Iran’s help to stabilise the Afghan situation and protect its considerable assets in Afghanistan. Otherwise, Pakistan could reassert its influence in Afghanistan using the Taliban and squeeze India out.
Thus, the best outcome for India would be if the US and Iran can revive the nuclear pact and allow foreign companies to freely do business with Tehran. This will allow New Delhi to revive its commercial contacts with Tehran and create space for bilateral strategic cooperation.
