Iran-India Relationship Dynamics versus evolving China-Iran Cooperation

Introduction

Iran and India are two ancient civilizations that have a long history of cultural, economic and political ties. The two countries established diplomatic relations in 1950 and have cooperated on various regional and international issues, such as Afghanistan, energy security, counter-terrorism and trade. However, their relationship has also faced challenges due to external factors, such as US sanctions on Iran, India's closeness to Israel, and Iran's partnership with China.

One of the key areas of bilateral cooperation between Iran and India is the development of the Chabahar port in south-eastern Iran, which provides India with an alternative route to access Afghanistan and Central Asia, bypassing Pakistan. India has invested about $500 million in the port project and has also committed to build a railway line connecting Chabahar to Zahedan, near the Afghan border. The port is seen as a strategic asset for both countries, as it enhances their regional connectivity and influence, while also serving as a counterweight to China's Belt and Road Initiative (BRI), which includes the China-Pakistan Economic Corridor (CPEC).

However, the progress of the Chabahar project has been slow due to various factors, such as US sanctions on Iran, which have hampered India's ability to finance and source equipment for the port. India has also faced competition from China, which has signed a 25-year strategic partnership agreement with Iran in 2020, covering cooperation in various sectors, such as energy, infrastructure, trade and defense. China has reportedly offered to invest $400 billion in Iran's economy over the next 25 years, including in the development of ports, railways, roads and industrial parks. China has also expressed interest in participating in the Chabahar project, which could undermine India's exclusive role and leverage in the port.

The role of China in making Iran a developed state is a complex and controversial issue. On one hand, China's investment and trade could provide Iran with much-needed economic relief and development opportunities, especially in the face of US sanctions and isolation. China is Iran's largest trading partner and oil buyer, accounting for about 30% of Iran's total exports and imports. China could also help Iran improve its infrastructure, technology and industrial capacity, as well as its regional connectivity and integration with other countries along the BRI.

On the other hand, China's involvement in Iran could also pose challenges and risks for Iran's sovereignty, security and interests. China's economic activities in Iran could come with political strings attached, such as requiring Iran to align with China's positions on global issues or to limit its ties with other countries. China could also exploit Iran's natural resources and markets without providing fair benefits or environmental safeguards for Iran. China's military presence and activities in Iran could also raise concerns among Iran's neighbors and rivals, such as Saudi Arabia, Israel and the US, who view China as a strategic competitor and threat.

In conclusion, Iran-India relations are multifaceted and dynamic, but also face constraints and uncertainties due to external factors. The development of the Chabahar port is a key area of cooperation between the two countries, but also faces challenges from US sanctions and Chinese competition. The role of China in making Iran a developed state is a double-edged sword for Iran, as it offers both opportunities and risks for its economic development and strategic autonomy.

What does Iran import & export from India?

The two countries share common interests in regional stability, energy security, connectivity and development. In recent years, their bilateral trade has witnessed ups and downs due to various factors, such as sanctions, pandemic, currency fluctuations and geopolitical tensions. We will look at the current status and trends of Iran-India trade, as well as the major products that are imported and exported between them.

According to the data from India’s Ministry of Commerce and Industry, the value of trade between Tehran and New Delhi increased by 21 percent in November 2023 compared to the same month in 2022 . The total bilateral trade during the fiscal year 2022-23 was $2.33 billion, registering a growth of 21.76% year-on-year. During the period, India’s export to Iran was $1.66 billion (a growth of 14.34% year-on-year) and India’s import from Iran was $ 672.12 million (a growth of 45.05% year-on-year).

India imports 156 commodities identified under 41 chapters across 16 sectors from Iran. The top five importing sectors are vegetable, minerals, chemicals, ceramic glass and others, and plastic and rubber. The main products that India imports from Iran are other nuts (mainly pistachios), ammonia, apples and pears, dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried, petroleum oils and oils obtained from bituminous minerals (other than crude), etc. The plastic and rubber sector saw a 404.08% increase in imports to $2.47 million in 2021-22 from $0.49 million in 2020-21. The chemicals sector saw a 16.02 % decrease in imports to $109.13 million in 2021-22 from $129.94 million in 2020-21.

India exports 1019 commodities identified under 71 chapters across 20 sectors to Iran. The top five exporting sectors are vegetable, chemicals, textile, machinery and electrical, and prepared food. The main products that India exports to Iran are rice, tea, bananas, medicaments containing other antibiotics and put up for retail sale, cane sugar (excluding those specified in note 2), iron ores and concentrates (including roasted iron pyrites), etc. The ceramic glass and others sector saw a 100.44% increase in exports to $9.1 million in 2021-22 from $4.54 million in 2020-21. The prepared food sector saw a 91.25 % decrease in exports to $31.27 million in 2021-22 from $357.53 million in 2020-21.

India’s dependence on Iran for its trade is relatively low compared to its total trade with the world. India imports 0.08% of its total imports from the world from Iran. India exports 0.41% of its total exports to the world to Iran. However, some sectors and commodities have a higher degree of dependence on Iran than others. For instance, India imports 17.67% of its total imports of other nuts from Iran. India exports 48.71% of its total exports of rice to Iran.

Iran-India trade has a lot of potential to grow further in the future, especially in areas such as energy, infrastructure, agriculture, pharmaceuticals, IT and tourism. The two countries have signed several agreements and memoranda of understanding to enhance their cooperation in these fields. Some of the key projects that are expected to boost their trade are the Chabahar port development, the International North-South Transport Corridor (INSTC), the Preferential Trade Agreement (PTA), etc.

In conclusion, Iran and India are important trading partners that have a mutually beneficial relationship based on historical ties and common interests. Their bilateral trade has shown a positive trend in recent months despite some challenges and obstacles. Their trade is diversified across various sectors and products, but there is still room for improvement and expansion. The two countries should continue to work together to overcome the barriers and tap into the opportunities that lie ahead.

?What does Iran import & export from China?

Iran and China have a long history of economic and political ties, dating back to the ancient Silk Road. In recent years, their relationship has become more important, especially after the U.S. withdrawal from the nuclear deal and the re-imposition of sanctions on Iran in 2018. China is Iran's largest trading partner and a major buyer of its oil, while Iran is a key link in China's Belt and Road Initiative, a global infrastructure and development project.

According to the Observatory of Economic Complexity, in 2021, China exported $8.27 billion worth of goods to Iran, and imported $5.94 billion worth of goods from Iran, resulting in a trade surplus of $2.33 billion for China. The main products that China exported to Iran were motor vehicles and parts, air pumps, vehicle bodies, transmissions, and spark-ignition engines. The main products that Iran exported to China were ethylene polymers, semi-finished iron, acyclic alcohols, refined copper, and crude petroleum.

In October 2023, the latest month for which data is available, China exported $792 million and imported $458 million from Iran, resulting in a positive trade balance of $334 million for China. Between October 2022 and October 2023, the exports of China to Iran increased by 17.5%, while the imports from Iran increased by 25.5%. The top exports of China to Iran in October 2023 were motor vehicles and parts ($85.8 million), vehicle bodies ($29.2 million), other plastic products ($28.5 million), transmissions ($23.5 million), and spark-ignition engines ($17.1 million). The top imports of China from Iran in October 2023 were ethylene polymers ($197 million), crude petroleum ($136 million), acyclic alcohols ($127 million), refined copper ($62.4 million), and semi-finished iron ($51.3 million).

The trade between Iran and China is not only driven by economic factors, but also by strategic considerations. Iran is a key ally of China in the Middle East, providing it with access to energy resources and markets, as well as a counterweight to U.S. influence in the region. China is a vital lifeline for Iran, providing it with diplomatic support and economic relief amid U.S. pressure and isolation. In 2021, the two countries signed a 25-year strategic cooperation agreement to deepen their economic and security ties, covering areas such as energy, infrastructure, technology, defense, and culture. In 2023, they signed 20 additional memos of understanding to implement the agreement.

However, the relationship between Iran and China is not without challenges and limitations. China has to balance its interests and relations with other regional actors, such as Saudi Arabia, Israel, Turkey, and Russia, as well as with the United States. China has also diversified its oil imports from other sources, reducing its dependence on Iran. Iran has faced difficulties in accessing its oil revenues from China due to U.S. sanctions and banking restrictions. Iran has also been disappointed by the lack of Chinese investment in its economy, despite the promises made in the cooperation agreement.

In conclusion, Iran and China have a strong and multifaceted trade relationship that reflects their mutual interests and needs. However, their trade is also influenced by external factors and constraints that limit its potential and scope.

Iran's defense cooperation with China and India analysis and future trends:

Iran and China have a long history of military cooperation that dates back to the 1980s, when China emerged as a major supplier of arms and technology to Iran during the Iran-Iraq War. Since then, the two countries have maintained a strategic partnership that has been strengthened by their shared opposition to U.S. influence and sanctions in the region. In 2016, Iran and China signed a 25-year comprehensive strategic cooperation agreement that included plans to enhance their defense and intelligence ties, as well as their economic and trade relations. Iran and China have also conducted joint naval exercises in the Persian Gulf and the Indian Ocean, and have agreed to exchange their military experience and expertise in various fields, such as drone warfare, electronic warfare, and anti-access/area denial (A2/AD) capabilities. Iran has also expressed interest in acquiring advanced Chinese weapons systems, such as the J-10B fighter jet, the BeiDou-2 satellite navigation system, and various types of drones.

Iran's defense cooperation with India, on the other hand, has been more limited and sporadic, mainly due to India's balancing act between its strategic partnership with the United States and its economic interests in Iran. India has been one of Iran's largest oil importers, and has invested in developing Iran's Chabahar port as a gateway to Afghanistan and Central Asia. However, India has also complied with U.S. sanctions on Iran's oil exports and nuclear program, and has reduced its military engagement with Tehran. India and Iran have held some joint naval exercises in the past, but they have not signed any major defense agreements or contracts. India has also been wary of Iran's close ties with China and Pakistan, which could pose a challenge to India's security interests in the region.

The future trends of Iran's defense cooperation with China and India will depend largely on the geopolitical dynamics in the region, especially the U.S. role and posture which is currently in decline due to recent war in the Middle East which seems to be spreading fast. If the U.S. re-enters the JCPOA and lifts some of the sanctions on Iran, this could create an opportunity for dialogue and de-escalation among the regional actors, and potentially open up more space for cooperation between Iran and India on issues of mutual interest, such as counterterrorism, maritime security, and connectivity. However, if the U.S. maintains its maximum pressure campaign on Iran, or adopts a more confrontational approach toward China, this could push Iran and China closer together, and deepen their strategic alignment against the U.S. and its allies in the region. In either scenario, Iran will likely continue to pursue its own defense modernization and self-reliance, while seeking to diversify its sources of military support and leverage from both China and India.

The future relationship and cooperation between Iran and India depends on several factors, such as:

1 - The outcome of the Iran nuclear deal negotiations, which have been stalled since 2022. India has supported the revival of the deal, which would ease the sanctions on Iran and allow India to resume its oil imports from the country.

2 - The development of the North-South International Transport Corridor and the Chabahar port, which are key infrastructural projects that would enhance the connectivity and trade between Iran, India, Afghanistan and Central Asia.

3 - The alignment of interests and values within the BRICS and SCO frameworks, which offer opportunities for cooperation on regional and global issues such as Afghanistan, Ukraine, terrorism, climate change and multilateralism .

4 - The management of bilateral sensitivities and external pressures, such as Iran's ties with China and Pakistan, India's relations with Israel and Saudi Arabia, and the U.S. role in the region.

Iran and India have a long history of cultural and civilizational ties, and share a common vision of a peaceful and prosperous region. Both countries have expressed their commitment to strengthening their strategic partnership in various fields. The future of this partnership will depend on how they navigate the challenges and seize the opportunities that lie ahead.