The Price India Paid for Abandoning Iran |
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To understand the scale of what India has surrendered in abandoning India’s relationship with Iran, one must understand what that relationship actually was – in civilisational, cultural, strategic and concrete economic terms. This was not a notional friendship maintained by diplomatic courtesy. It was one of the most substantive bilateral relationships in the region, built across millennia of shared civilisation and reinforced by decades of strategic investment and economic interdependence.
The civilisational bond between India and Iran is among the oldest in the world. The Indus Valley and Mesopotamian civilisations traded across the Persian Gulf 4,000 years ago. Persian was the court language of Mughal India – the language of governance, literature and high culture – across the subcontinent for centuries. Around 15% of India’s Muslim population is Shia – a community with direct theological and cultural ties to Iran.
The Sufi traditions that shaped north Indian music, poetry, and spiritual life moved through Persian intermediaries. The literary traditions of Urdu – India’s own language – are rooted in Persian. Even Union external affairs minister S. Jaishankar has noted in his public remarks, Persian long remained central to India’s courtly and administrative life, reflecting the depth of India–Iran civilisational ties–even into the period of British expansion.
Even in the modern era, formal diplomatic relations were established with Iran on March 15, 1950 – among India’s earliest post-independence bilateral ties. The relationship was institutionalised through the Friendship Treaty of 1950, the Tehran Declaration of 2001, the New Delhi Declaration of 2003, and a series of subsequent agreements that built an increasingly dense architecture of friendship and cooperation.
Iran’s strategic importance to India cannot be reduced to any single dimension. It was simultaneously an energy partner, a connectivity gateway, a counter to Pakistan’s diplomatic manoeuvrings in the Islamic world, and the western anchor of India’s Central Asian strategy. Each of these dimensions was concrete, irreplaceable and built through decades of sustained diplomatic and economic investment. What Iran gave India was perhaps more than any country could offer.
For most of the period between 1990-2018, Iran was either the second or third largest supplier of crude oil to India. At its peak, Iran supplied over 425,000 barrels per day – approximately 23.5 million tonnes per year, representing 16.5% of India’s total crude import basket. Iranian crude was not simply available; it was specifically advantageous. Iran offered freight discounts, favourable payment terms, and crucially, settlement in rupees rather than dollars – meaning India could pay for its energy imports without depleting its foreign exchange reserves or subjecting its energy security to dollar-denominated market volatility. Iranian crude, including heavy grades, was highly compatible with several Indian refineries – such as the Mangalore refinery – which became major consumers of Iranian oil due to its technical suitability and favourable commercial terms.
The Farzad-B gas field in the Persian Gulf was, beyond oil, a symbol of the potential depth of India’s energy partnership with Iran. In 2008, a consortium led by ONGC Videsh Limited – India’s national overseas oil investment arm – discovered the Farzad-B gas field in Iran’s Farsi offshore block. The field’s reserves are estimated at around 21–23 trillion cubic feet of natural gas, with a substantial proportion – often cited at roughly 60% – considered recoverable. The Indian consortium invested around $400 million in exploration. It offered a $6.2 billion development plan, with projected production of 1.1 billion cubic feet of gas per day. This was a gas field that could have provided India with long-term energy security while cementing the bilateral relationship at a level comparable to India’s most significant global partnerships.
The Farzad-B story became, under Modi, a parable of comprador paralysis. As US sanctions on Iran intensified after 2018, India – incapable of asserting the independent relationship that former Prime Minister Manmohan Singh had maintained – allowed the negotiations to stall. In May 2021, Iran, tired of Indian delay, awarded the Farzad-B development contract to a local Iranian company. India lost a $400 million exploration investment, a $ 6.2 billion development........