The Chabahar Port deal is a significant milestone in India-Iran relations.

The deal has attracted international attention, with the US warning entities engaging in business with Iran about the risk of sanctions. But Eric Garcetti, the US Envoy to India, later said some exceptions can be made for strategic interests.

With the appointment of S Jaishankar as External Affairs Minister, India’s foreign policy has become more assertive.

The deal with Iran should be viewed as part of this assertive foreign policy approach under Jaishankar. The message is clear –– Indian interests will take precedence over the interests of other great powers.

In contrast to India suspending oil imports from Iran under US pressure five years ago, the current agreement with Iran highlights India prioritising its strategic interests, despite potential international pressures.

This contract also highlights New Delhi’s efforts to reintegrate Tehran into the global economic system, which is expected to facilitate significant volumes of global trade through Iran, benefiting its economy.

The speed bumps

While the India-Iran deal presents numerous opportunities, it also poses critical challenges, particularly given the ongoing geopolitical shifts in the Middle East and Europe. A major challenge for New Delhi is the successful implementation of its economic diplomacy strategy, which it aims to achieve through connectivity projects such as the INSTC and the India-Middle East-Europe Economic Corridor (IMEC). Balancing these initiatives amidst a complex and evolving geopolitical landscape will be crucial for India’s strategic ambitions.

Both the INSTC and the IMEC face significant challenges due to ongoing conflicts at their respective ends. The INSTC is impacted by the Russia-Ukraine conflict, while the IMEC is affected by the Israel-Hamas conflict. These active conflicts raise substantial doubts about the complete utilisation of such corridors.

While some analysts are optimistic that the Chabahar Port deal can revitalize the INSTC, the active conflict at the far end of the Corridor, namely in Ukraine, will likely limit its potential. Therefore, for the India-Iran deal to have a meaningful impact on the INSTC, it is crucial for the governments involved to work towards a peace plan in Ukraine. Only through stabilising these regions can the full benefits of such ambitious connectivity projects be realised. Another possible strategic challenge for New Delhi will hinge on the outcome of the US elections. If Donald Trump returns to power that could jeopardise India’s engagement with Tehran. In 2019, New Delhi distanced itself from Tehran while Trump was in power.

Trump factor

Known for his unpredictable foreign policy decisions, Trump’s potential return could pose similar challenges for India, as it might not receive the flexibility it needs in its dealings with Iran. Keeping this in mind, New Delhi must prepare for the possibility of renewed pressure on its relations with Iran if Trump reclaims the presidency.

As long as New Delhi is able to see through its economic diplomacy efforts, intertwined with its peace-building efforts, the Chabahar Port deal provides an opportunity to revive the INSTC.

At this juncture, the most critical task is to closely monitor the upcoming US elections and be prepared to manage potential challenges if Trump returns to power. His unpredictable foreign policy could complicate the India-Iran relationship. This will help India to advance its strategic interests and foster regional connectivity.

The writer is a manager, Aakhya India