"Among the many peoples and races who have come in contact with and influenced India's life and culture, the oldest and most persistent have been the Iranians," wrote Nehru in his Discovery of India. It is through statesmanship that challenges contesting the relations have been met throughout history.
India meets 70 per cent of its needs through crude oil imports and ranks sixth in global petroleum demand. By 2010, India is projected to replace South Korea and become the fourth-largest consumer of energy, after the United States, China, and Japan. In its quest to secure adequate resources, India has forged strategic alliances with several countries. It looks to work in partnership with historical rival Pakistan for construction of major fuel pipelines, with Iran, Sudan, Venezuela, and Myanmar.
India-Iran relations came to a high point on 26 January 2003 when the Iranian President Khatami won the plinth as our chief guest at the nation's Republic Day parade, a privilege held in reserve for New Delhi's most trusted friends. India and Iran forged an historic strategic partnership since then. While Iran wants to bolster defense development programs, India wants oil.
Indian policymakers tend to downplay military relations with Iran, but the 'strategic relations' with Tehran have a significant military dimension. The two countries conducted a joint naval exercise in March 2003, conceivably motivated by the US naval presence in the Persian Gulf. According to a recent CSIS report - Iran's Developing Military Capabilities - Iran sought India's help to service it's naval and air force equipment and in developing batteries for its submarines, which are more suitable for the warm waters of the Gulf than those supplied by Russia. China, however, is selling far more military hardware (especially missile technologies) to Iran than India. On its part, Iran plans to give presentations on some of its defense development programs, including 1,000-pound bombs, Fadzr-3 rocket systems and Hadaf-300 training unmanned aerial vehicles.
India is also helping Iran build a transport corridor that will link India with Central Asia through Afghanistan and Iran. As part of this project, India will assist Iran in modernizing the Chahbahar port connecting it to the main roads. India also signed a memorandum of understanding more than a year ago with Iran and Turkmenistan to facilitate Indian exports to Central Asian countries by rail across Iran from the port of Bandar Abbas. There also is an agreement between Russia, India and Iran to construct an International North-South Transport Corridor. Creation of East Corridor connecting Uzbekistan, Iran, and Afghanistan is also on the cards.
The import of oil and natural gas through a pipeline, an important aspect of the India-Iran relations, not only provides security of supply of a large quantity of clean fuel, but also addresses a strategic challenge, with several political dimensions. For Iran, which has vast reserves of natural gas in its southern part, the subcontinent is clearly the most attractive market. It was in 1989 that Dr Ali Shams Ardekani, later Deputy Foreign Minister of Iran, and R. K. Pachauri jointly developed a proposal for import of natural gas from Iran to India through a pipeline stretching overland across Pakistan. India expects the $4.5 billion India-Iran gas pipeline to be completed by 2009-end. The thaw in India-Iran relations has allowed Indian companies to make some inroads into Iran. Recently, Indian Oil Corporation reached an agreement with the Iranian firm Petropars to develop a gas block in the gigantic South Pars gas field, which holds the largest natural gas reserves in the world.
The growing connection between India and Iran is significant, given India's good relations with Israel and the United States. A hitch cropped up when Condoleezza Rice, during her recent visit to India said, "Washington is opposed to the $4 billion pipeline deal with Iran, a nation the Bush Administration is trying to force to abandon its nuclear programme." Though perturbed initially, India brushed off US concerns and has asserted that it would go ahead with the landmark pipeline deal "without any compromise". Adding to it is Mani Shankar Aiyer's remark that "the multifaceted relation with Iran can't be compromised for any third party concern." Interestingly, the US has offered "broad energy dialogue" to India to discuss nuclear energy cooperation possibilities. Israel is quiet as long as the connection does not become overtly military in nature. Also this emerging relations leave Pakistan 'isolated and surrounded'. Pakistan has worked hard to expand its own trade with Iran to counteract India's perceived efforts to outflank it.