Published 17:06 IST, January 9th 2020
Iran-US conflict: Here's what it means for India
Given India's interests in maintaining a strong relationship with both Iran & the US, a balancing act may be imperative both geopolitically & economically
Advertisement
On Wednesday, US President Trump addressed media claiming re were “ casualties” due to Iran strike on US bases in Al-Asad and Erbil in Iraq. This was in retaliation for US killing General Qassem Soleimani. But conflict doesn’t seem to have de-escalated with information about two rockets hitting Green Zone in Iraq’s capital of Baghdad coming in. But why should India be concerned about US-Iran conflict? Here is why:
US exemptions to India may be hit
strain in US-Iran relations has already affected India in past when US refused to renew exemptions from sanctions given to eight countries, including India. This was done in order to put pressure on Iran to curtail its nuclear weapons programme.
w, with Iran official backing out of nuclear deal, US might increase pressure on countries like India which have cordial relations with Iran.
Advertisement
Price of crude oil likely to impacted
India is third largest consumer of oil and US-Iran conflict is likely to hit crude oil prices in India. A stable gulf region means ease in crude oil imports at competitive rates. It would also mean smooth access and trade with Iran for oil.
military confrontation in Iran and Iraq at present is likely to drive crude oil prices up which will have a direct and chain impact on inflation, and subsequent monetary decisions of India.
A hike in crude oil rates would weigh heavy on ordinary consumer who is likely to see an increase in petrol and diesel.
Advertisement
Chabahar project in jeopardy
US-Iran conflict could have a negative impact on Chabahar project which is crucial to India from a geopolitical standpoint.
Chabahar port provides a route to Afghanistan and Central Asia. port is being jointly developed by India with Iran and Afghanistan, and tensions in region may cause project to be parked or, in least, may slow down pace in which port is developed.
In fact, even last year, furr development of port which ends any dependence of Pakistan for trade with Afghanistan was stalled owing to US-Iran tensions. External Affairs Minister Dr. S Jaishankar had personally met Iran’s Iranian Foreign Minister Javad Zarif, on December 22, 2019 to discuss acceleration of project.
Advertisement
US-Iran may attempt to coerce India to take a side
Given Indian interests in maintaing a strong relationship with both Iran and US, it is important for country to play a balancing act in current conflict.
This balancing act may become tougher with US trying to draw India to its side and Iran calling for Indian intervention. US President Trump has been saying Gen Soleimani was responsible for terrorist plots in Delhi. Meanwhile, Iranian Ambassador to India Dr. Ali Chegeni said Iran would “welcome any Indian peace initiative for de-escalating its tensions with US”.
Advertisement
Indian exporters trading with Iran may take a hit
India and Iran have a strong trade relationship which dates back to 1961. This relationship involves India exporting textiles, food, agricultural products, electrical goods, hardware, handicrafts, and various or products. Instability in Iran due to US-Iran conflict will have a direct impact on Indian exporters who depend on dealings with Iran.
trade mechanism between Iran and India is a rupee-deminated bilateral trade mechanism, and this means of payments is fast depleting possibly leading to possible payment blocks in future.
Reports indicate that India-Iran trade has already seen a decline in April-vember of fiscal year to 79.4%, which is a fall to $3.5 billion from $17 billion.
Advertisement
(Picture courtesy: PTI)
13:54 IST, January 9th 2020