History :-
The history starts from the Cold War period. The non-aligned India established close military links with the Soviet Union and Iran sided with the USA. Iran continued its support to Pakistan and India’s support to Iraq during the Iran-Iraq war further deteriorated the relations. Both the countries ended on the same side against the Taliban regime in Afghanistan and were backed by the USA. In 2003 they announced the establishment of strategic relations.
Economics :-
Iran was India’s second largest oil supplier before the American imposed sanctions. Since independence, India’s position is that it only recognizes UN sanctions. But in order to maintain close ties with the USA, Indian government has stopped the oil import from Iran. Earlier both the countries had a bilateral trade of $12 billion in favour of Iran. India used to export tea and rice and Iran’s interest in these imports was mainly due to huge Indian oil demands. Now that the oil import has stopped, we will have to wait and watch what the new government does for making up the losses due to sanctions and maintaining cordial relations with Iran.
Geopolitics :-
India is developing Chabahar port in Iran which was economically, strategically very essential for India. Chabahar was India’s gateway to the middle east (esp. Afghanistan) completely bypassing Afghanistan. Though India has been working relentlessly on its development but India abiding by US sanctions may compromise our relations with Iran. India was planning to construct a 900 km rail route too from Iran to resource-rich Hajigak region of Afghanistan.
Defence :-
The security relations boosted between India and Iran when the Iranian President Hojjatoleslam Seyyed Mohammad Khatami paid a state visit to India in January 2003 where he was the guest of honour at Republic Day. In a landmark accord, India agreed upon future Iranian access to Indian military technology. Both countries have agreed to work towards regional peace and stability. The navies of both countries have participated in maritime exercises quite a few times.
Conclusion :-
Though we have enjoyed cordial relations with Iran till now. According to a BBC poll of 2005, 71% of Iranians consider the Indian impact to be beneficial for their nation, the most favourable rating of India for any country in the world. But abiding by the US sanctions bring a whole lot of baggage with it and India needs to find some way out of it soon.
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