Can fallout of Iran’s President Ebrahim Raisi’s death affect India-Iran trade ties?

Trade ties challenged by geopolitics: Three days after India signed a pact with Iran to seek control of the Chabahar port for the next ten years, a move strategically aimed to counter the Gwadar port which has China and Pakistan in a close collaboration, the death of Iranian President Ebrahim Raisi in a fatal chopper crash is making industry watchers to wait with a bated breath. Traditionally, Iran and India, apart from the trade exchange of energy, have seen a brisk exchange of trade in terms of Iranian carpets, saffron and several herbs imported by India. 
Besides, the two countries which signed a friendship treaty in 1950, saw bilateral trade reach $2.33 billion in 2023-24 buoyed by President Raisi’s pro-trade policies. Prior to that, the trade volumes were considerably lower but the two countries are known to be in a collaboration involving soft trade as well. Will the 2.17 per cent spurt in India’s bilateral trade with Iran seen in 2023-24, continue to thrive despite geopolitical tensions in West Asia and the uneasy calm that prevails in Iran. Republic Business takes a deep dive.

Raisi’s death fallout 

A day after Iran’s President Ebrahim Raisi’s death, it becomes imminent to gauge India-Iran bilateral trade ties. As per the Ministry of External Affairs, bilateral trade reached $2.33 billion in 2023-24 under President Raisi’s. As much as 2.17 per cent spurt in India’s bilateral trade with Iran in 2023-24 was seen as a shot in the arm for both the countries.  Buoyed by President Raisi’s pro-trade policies, soft trade, and cultural exchanges had also received a fillip. Over 15,000 Iranian students are presently pursuing their higher education in India, says the MEA data.   Prices of oil and that of gold shot up soon after Raisi’s death. In a low-demand year as indicated by International Energy Agency, high oil prices may see a spike in India’s import bill. 

India’s own Silk Route 

India and Iran having signed a friendship treaty in 1950 was the first boost to bilateral ties of the two countries. The countries that have been sharing a robust cultural exchange, signed a friendship treaty in 1950, marking the beginning of diplomatic relations.  As per MEA, post Iranian Revolution in 1979, a new phase of engagement began between Indian and Iran. Last week, as India signed a pact with Iran to seek control of the Chabahar port for the next 10  years, this came as a shot in the arm for the two nations. Chabahar Port is a pivotal point to give India a strategic edge in the India-Middle East- Europe Economic Corridor. India has gone ahead with Chabahar pact despite US sounding alert on imposing sanctions on such ties with Iran. Former US President Donald Trump in his tenure has given a leeway to bilateral trade such as port businesses 

Political Puzzle 

Soon after Iran President Raisi’s death, the country appointed Vice President Mohammad Mokhber as its acting president. Iran’s former foreign minister blaming US for Raisi’s death is being seen as a potential provocation. Raisi’s death also puts the proposed supreme leader Seyyed Ali Hosseini Khamenei’s succession plan to rest. The deceased President Raisi was touted to be  Khamenei’s successor.  Amid prevailing Red Sea tensions with militant group Houthis armed attacks, not just the West Asia but Eurasia stands engulfed in geopolitical tensions. With Iran politically unstable, Israel-Gaza war may welll spiral and see its ramifications in Asia and Europe as well. Most analysts feel that in view of the fragility of the situation, India must wait and watch the fluid developments unfolding in West Asia and the surrounding regions.