Iran – India, a Win-Win relationship

Namo's visit to Iran can lead to a Win-Win for both countries

Namo's visit to Iran can lead to a Win-Win for both countries
Namo's visit to Iran can lead to a Win-Win for both countries

Prime Minister Modi’s upcoming visit to Iran follows the External Affairs Minister’s visit to that country. As mentioned previously, Iran and India have been working on enhancing bilateral economic cooperation in energy, infrastructure – including shipping, ports and railways — and trade and commerce.

Iran has been keen that India’s Public and Private sector participate in the development of Chabahar port and Chabahar Free Trade Zone (FTZ) and in setting up industrial units in the FTZ. In May 2014, Iran and India signed an MoU to jointly develop the port once the global sanctions against Iran were lifted.

Chabahar is situated in the Gulf of Oman to the border with Pakistan, and Iran plans to turn it into a transit hub for immediate access to marketplaces in the northern area of the Indian Ocean and Central Asia.

In April, India promised to invest up to $20 billion into building an Oil Refinery at Chabahar port. By building the Refinery in Chabahar, India provides Iran with infrastructure to refine its own crude for consumption. Plus it can sell refined products to its customers if they choose to do so. In return, India will be able to negotiate a long term oil supply arrangement. It could even be able to do it without coughing up its precious dollars for it. Assuming that India can get up to 50% of its crude needs from Iran, that would take a huge load off its Current Account requirements.

The faster India gets off its Dollar albatross for its Oil, the better it is. It can pass on the savings of the Crude pricing to the customer and that will make a big dent in the Consumer Price Index (CPI). This won’t happen overnight but once Crude starts flowing from Iran, the writing is on the wall for the hoarders. Once they realize that they will get less for their produce tomorrow than today, prices will fall like a stone.

In India, Iran will find a stable consumer and in Iran, India will get a consistent producer. India can help Iran modernize rapidly. It is a Win-Win for both.

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An inventor and out-of-the-box thinker, Sree Iyer has 37 patents in the areas of Hardware, Software, Encryption and Systems.

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