What India fears as it cheers Iran's Nuclear deal

With Iran and six world powers agreeing on the parameters of a deal meant to block Tehran from developing nuclear weapons in exchange for the lifting of sanctions, India now finds itself in a tricky situation – for opportunities have come with fears as well.

New Delhi is relieved, as the deal could restore country's strategic credibility and re-energise the country by looking into fresh direct agreements with Tehran on purchase of oil and gas. Worried, as there could now be fierce competition, as the Western companies will now rush to Tehran seeking greener pastures. Iran was India's second largest supplier of oil but now has slipped to sixth position.

In the wake of newfound bonhomie with the US, relations with Iran had been one of the toughest diplomatic challenges for the Delhi's political elite. Visibly relieved, officials at the ministry of external affairs, petroleum and natural gas as well as at the Prime Minister's Office (PMO), though contacted separately, conceded that India's vote at the International Atomic Energy Agency (IAEA) against Iran, along with the stalling of the LNG and Iran-Pakistan-India (IPI) pipeline deal, had proved a challenge to country's strategic autonomy. Many saw stalling of these projects, as India's trade-off to please Western powers.

MEA spokesperson Syed Akbarudin maintained that India had always held the view that the Iranian nuclear issue should be resolved peacefully. Describing the understanding a significant step towards the comprehensive settlement, he said the announcement underlines the success of diplomacy and dialogue, which India has always supported and could lead to a comprehensive agreement by June 30.

India now hopes that with the relations coming out of the US cloud, Iran will once again become a corner stone, not only for its energy security, but also for its strategic interests in maintaining influence in Afghanistan and Central Asia.

Wary of Pakistan's designs, India and Iran have been supporting former Northern Alliance leaders to keep Taliban and other extremist elements at a bay.

India earned Tehran's wrath when it voted against Iran in the IAEA in 2005 and although it continued to buy Iranian crude despite the sanctions, it reduced its off-take drastically. Iranian officials have calling it a setback in relations and reminded India, how Tehran had saved New Delhi from an embarrassing situation at the United Nations by stalling a resolution related to Kashmir in 1994.

India has also opted out of the IPI – although officially it remains on the table – and has instead showed more enthusiasm for the rival Turkmenistan-Afghanistan-Pakistan-India (TAPI) project.

The sanctions also affected India's crude oil payments of over $3 billion. Though, both countries had come to an agreement last year to put in place a rupee payment mechanism which allowed India to pay for 45 per cent of oil purchase in its local currency, there were still hiccups. Since 2013, Turkish route of payment for oil sourcing was also halted following the Western objections. Iranian Foreign Minister Javad Zarif was quoted as being disappointed with India's decision to cut oil imports.

Officials here are expecting a fast movement on building the regional transport networks – International North South Transport Corridor, which will help connect South, Central and West Asia to Europe for regional economic development. Most significantly, India will accentuate participation in Chabahar port project, located on the Makran coast of the Sistan and Baluchistan province of Iran. It is often referred to as the 'Golden Gate' to the landlocked Commonwealth of Independent States (CIS) countries and Afghanistan. Chabahar has immense potential to connect the business centres in South Asia (Mumbai, Jamnagar, etc), the Middle East (Dubai), Central Asia (Turkmenistan) and Afghanistan (Milak).

But opportunities have come with fears as well. A senior government official here conceded that over past one year, several countries and companies, including European and Japanese have been eagerly waiting for lifting of sanctions imposed on Iran. There will be a tough competition not only to access Iran's vast energy resources, but also enter its lucrative market.

"In particular, European companies, which had exited from Iran four years ago, when the sanctions were tightened, are at the forefront leaving their American counterparts behind," they said. Many had already begun exploratory talks with Iran. Officials are expecting a mad rush for a share of the lucrative Iranian energy pie similar to Myanmar's opening up last year.