REFERENCE NOTE

No.23/RN/Ref./July/2016

For the use of Members of Parliament NOT FOR PUBLICATION1

INDIA-IRAN BILATERAL RELATIONS

Prepared by Smt. Neelam Sethi, Additional Director (23034876 ) and Shri Abhishek Thakur, SLA of Lok Sabha

Secretariat under the supervision of Smt. Kalpana Sharma, Joint Secretary and Shri C.N. Sathyanathan, Director.-

The reference material is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication. This Service is not to be quoted as the source of information as it is based on the sources indicated at the end/in the text. This Service does not accept any responsibility for the accuracy or veracity of the information or views contained in the note/collection.

MEMBERS' REFERENCE SERVICE

LARRDIS

LOK SABHA SECRETARIAT, NEW DELHI

----------------------------------------INDIA-IRAN BILATERAL RELATIONS

“My visit to Persia has given me faith in the power of the eastern peoples to assert themselves

and quickly find their way to a united manifestation of their undying heritage in spite of conflict

and difficult economic circumstance”.1

Rabindra Nath Tagore

Introduction

The peoples of India and Iran, two ancient neighboring civilizations, have enjoyed

close historical links through the ages. They had a common homeland and share a common

linguistic and racial past. Over the several millennia, they interacted and enriched each

other in the fields of language, religion, arts, culture, food and other traditions. Iran is

situated in India's extended neighborhood and the two countries have significant overlap in

their economic and security space. Today the two countries enjoy warm, friendly relations

and cooperate in a wide range of fields2.

I. Political Relations

India-Iran relations span centuries marked by meaningful interactions. The two

countries shared a border till 1947. Independent India and Iran established diplomatic links

on 15 March 1950.The Shah of Iran visited India in February/March 1956 and Prime

Minister Pandit Jawaharlal Nehru visited Iran in September 1959. Prime Minister Smt.

Indira Gandhi visited Iran in April 1974 and Prime Minister Shri Morarji Desai visited in

June 1977. The Shah, in turn, visited India in February 1978.

The Iranian Revolution in 1979 introduced a new phase of engagement between

India and Iran marked by exchange of high level visits of Indian Prime Minister Shri

Narasimha Rao in September 1993, Iranian President Akbar Hashemi Rafsanjani in April

1995 and Indian Vice President Shri K. R. Narayanan in October 1996. The trend was

1 http://www.indianembassy-tehran.ir 2 India Iran Historical Links Part I: http://www.indianembassy-tehran.ir

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consolidated and enhanced at the turn of the millennium with visits by Prime Minister Shri

Atal Behari Vajpayee in 2001 and a return visit by President Mohammad Khatami in 2003,

when he was also the Chief Guest at the Republic Day function. The Iranian President Dr.

Mahmoud Ahmadinejad visited India on 29 April 2008.

The year 2012 witnessed further strengthening of the relations between the two

countries. The Prime Minister Dr. Manmohan Singh visited Iran to attend the 16th Non-

Aligned Movement (NAM) Summit held in Tehran on 28-31 August 2012. Iran had

assumed the Presidency of NAM in 2012. On the sidelines, Hon’ble Prime Minister met

Supreme leader Ayatollah Ali Khamenei and President Dr. Mahmoud Ahmadinejad. Both

sides reviewed the entire gamut of bilateral relations and called for further strengthening

the centuries old relationship between India and Iran. Hon’ble Vice President of India Shri

M. Hamid Ansari graced the swearing-in ceremony of the newly elected Iranian President

Dr. Hassan Rouhani on 04August 2013. Hon’ble Vice President met Dr. Hassan Rouhani

and the two leaders discussed issues of mutual interest in the bilateral, regional and

international arena. Prime Minister, Shri Narendra Modi, met Iranian President Dr.

Hassan Rouhani in Ufa (Russia) on 9 July 2015.

Prime Minister Shri Narendra Modi visited Iran on 22 May 2016.

3

3 http://www.indianembassy-tehran.ir/

Chronology of Indian Heads visit to Iran

1) Prime Minister Pandit Jawaharlal Nehru visited Iran in September 1959.

2) Prime Minister Smt. Indira Gandhi visited Iran in April 1974.

3) Prime Minister Shri Morarji Desai visited Iran in June 1977.

4) Indian Prime Minister Shri Narasimha Rao visited Iran in September

1993.

5) Prime Minister Shri Atal Behari Vajpayee visited Iran in 2001.

6) Prime Minister Dr. Manmohan Singh visited Iran to attend the 16th

Non-

Aligned Movement (NAM) Summit held in Tehran in August 2012.

7) Hon'ble Vice President of India Shri M.Hamid Ansari graced the swearing-

in ceremony of Iranian President Dr. Hassan Rouhani in August 2013.

8) Prime Minister Shri Narendra Modi visited Iran in May 2016.

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The two countries have in place several bilateral consultative mechanisms at various

levels which meet regularly. In addition to the Embassy in Tehran, India currently has two

Consulates in Iran -Bandar Abbas and Zahedan.

III. Commercial Relations

India-Iran enjoys economic and commercial ties covering many sectors. However

the trade relations have traditionally been buoyed by Indian import of Iranian crude oil

resulting in overall trade balance in favor of Iran.

The India-Iran bilateral trade during the fiscal 2014-15 was US$ 13.13 billion. India

imported US$ 8.95 billion worth goods mainly crude oil and exported commodities worth

US$ 4.17 billion. The unilateral economic sanctions imposed on Iran have had an adverse

effect on the bilateral trade as the international banking channels have gradually become

non-existent.

Trend in India-Iran Bilateral Trade (figures in Million US$)

YEAR Export from

India

Import by

India

Trade

Balance

Total

Bilateral

Trade

Growth Rate

2008-09 2534.01 12376.77 -9842.76 14910.78 15.70

2009-10 1853.17 11540.85 -9687.68 13394.02 -10.17

2010-11 2492.95 10928.21 -8435.26 13421.16 0.20

2011-12 2411.35 13556.73 -11145.38 15968.08 18.98

2012-13 3351.21 11603.79 -8252.58 14955.00 -6.34

2013-14 4971.98 10307 -5335 15279

2014-15 4175 8955 -4780 13130

Source Ministry Of Commerce, GOI(-http://commerce.nic.in/publications)

India and Iran hold regular bilateral discussions on economic and trade issues within

the framework of India-Iran Joint Commission Meeting (JCM). The 18th

India-Iran JCM

was held in New Delhi on 28 December, 2015.The meeting was chaired by External

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Affairs Minister Smt. Sushma Swaraj and Mr. Ali Taiebnia, Minister of Economy and

Finance of Iran. A MOU on cooperation in trade, finance, energy, infrastructure and

cultural issues was signed during the JCM.The Visa facilitation agreement for diplomatic

and official passport holders wasexchanged in the meeting.In the Joint Commission

Meeting (JCM), Smt. Sushma Swaraj mentioned that India considers Iran as an important

partner and expressed satisfaction at the growing bilateral interaction in diverse area. The

external Affairs Minister underlined the efforts underway to enhance bilateral economic

cooperation in energy, infrastructure – including shipping, ports and railways - and trade

and commerce. She also stressed that connectivity afforded by Indian participation in

Chahbahar Port will facilitate linking Afghanistan and Central Asia with India. The Iranian

side suggested participation of India’s public and private sectors in development of

Chahbahar Port and Chahbahar Free Trade Zone (FTZ) and in setting up industrial units in

theFTZ.

The External Affairs Minister emphasized the need for early completion of all

necessary procedures for India’s participation in Farzad-B field and pointed out India’s

desire to participate in other oil and gas explorations in Iran as well.

Prior to this, a Memorandum of Understanding was signed between India and Iran in

May 2015 by Shri Nitin Gadkari. Minister of Shipping, Road Transport & Highways and

his Iranian counterpart. As per the MoU, India is to equip and operate two berths in

Chabahar Port Phase-I with capital investment of US$ 85.21 million and annual revenue

expenditure of US $ 22.95 million on a ten year lease. Ownership of equipment will be

transferred to Iranian side on completion of 10 year period or for an extended period,

based on mutual agreement. The Iranian side had requested for provision of a credit of

US$ 150 million in accordance with the MoU. As per the MoU, operation of two berths

will commence within a period of maximum 18 months after the signing of the Contract.

The two berths will be operated by the India Ports Global Private Limited, a

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Company promoted by the Jawaharlal Nehru Port Trust and Kandla Port Trust - two major

ports working under the Ministry of Shipping. The External Affairs Minister S5mt.

Sushma Swaraj visited Tehran in April 2016 at the invitation of her Iranian counterpart

Dr.Javad Zarif.

Some of the Key features of Indo-Iran Trade relations are:

Iran welcomed the investment of Indian side in setting up plants in sectors such as

fertilizers, petrochemicals and metallurgy in Chabahar (Free Trade Zone) FTZ on

terms mutually beneficial to the concerned parties.

Iran hopes that India’s participation in developing Chabahar Port will open a new

chapter in bilateral cooperation and regional connectivity, and encourage more

maritime links and services between the two countries.

President Rouhani and Prime Minister Shri Narendra Modi agreed to strengthen the

longstanding trade ties between the two countries by, inter alia, stepping up the

momentum of economic engagement through early conclusion of a Preferential

Trade Agreement, preferably within a year.

India-Iran agreed to conclude Double Taxation Avoidance Agreement and Bilateral

Investment Treaty before the end of the year 20164.

The landmark trilateral Chabahar deal signed by Iran, India and Afghanistan will

reduce transportation expenses at least by 30 per cent.5

The Confederation of the Indian Industry (CII) is to open a regional office in

Tehran.6

India is one of the biggest buyers of Iranian crude, and is set to import at least

400,000 barrels per day (bpd) from Iran in the year from April 2016.

III. CULTURAL RELATIONS

India-Iran share civilization ties. It was believed that before 2000-3000 BC, the

inhabitants of modern Iraq and Southern Iran also the people of West and North West

India came from the same region. There was trade between the coast of Southern Iran and

4 http://www.mea.gov.in -Joint Statement-Indian Embassy 5 http://www.dnaindia.com/..... source PTI 25 May 2016 6 http://www.indianembassy-tehran.ir India-Iran Relations-Indian Embassy-Commercial Relations

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India through the Persian Gulf and the Arabian sea during the Indus valley civilization

and contemporaneous civilizations of Iran. India is mentioned in the Avesta and in Rig-

Veda there are references to Persia. Similarly, Sanskrit and Avesta have a common basic

vocabulary and common grammar, also the hymn of Gayatri resembles the Gatha of the

ancient Iranians.

India and Iran both share some common history, culture and literature. For

example, the scripture Vedas of the Indian Aryans are much similar to Avesta of the

Iranian . Sanskrit and Avesta have a common basic vocabulary and common grammar.

Early Persian poetry, creation of east Persians, cultivated abstract mental forms recalling

the grace of Buddhist statues. Panchtantra, the collection of Indian fables was translated

from Sanskrit to Pehalvi by Burzoy-e-Tabib who called it Kalilava Demna. The Taj Mahal

of Agra was constructed by an Iranian architect named IsaIsfahani.7

Measures taken to boost India & Iran cultural relations

To strengthen cultural relation between India and Iran, Prime Minister Shri

Narendra Modi gifted the Supreme Leader His Eminence Grand Ayatollah Sayyid

Ali Hosseini a specially commissioned reproduction of a rare seventh-century

manuscript of the Holy Quran attributed to Hazrat Ali, the fourth caliph. Written in

Kufic script, this manuscript is a prized possession of the Ministry of Culture’s

Rampur Raza Library. The Prime Minister also gifted the Iranian President Dr

Hassan Rouhani specially commissioned reproductions of Mirza Asadullah Khan

Ghalib’s collection of poetry in Persian, Kulliyat-e-Farsi-e-Ghalib, as also Sumair

Chand’s Persian translation of Ramayana8.

An event "India and Iran, Two Great Civilizations: Retrospect and Prospect" was

organized jointly by the Indian Council for Cultural Relations (ICCR) and the

Academy of Persian Language and Literature (Farangistan) in Tehran from 23-25

May 2016.9

7 http://www.indianembassy-tehran.ir India-Iran Historical Links 8 http://www.narendramodi.in/pm-modi-s-gift-to-iranian-president-dr-hassan-rouhani-- 9 http://www.mea.gov.in -Joint Statement-Indian Embassy

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Indian Embassy in Iran has brought out a bi-monthly magazine named “Ain-e-

Hind’ (Mirror of India) taking India to the drawing rooms of the general Iranian

public.

MoU was signed between the Indian Council for Cultural Relations (ICCR) and the

Islamic Culture and Relations Organization (ICRO) to encourage scholars, authors,

media, film community, artists, youth and sportspersons to participate in each

other's cultural and other such festivals planned for the coming two years.

On 03 May, 2013 India Cultural Center in Tehran was officially inaugurated by the

then, Hon’ble External Affairs Minister of India, during the17th India-Iran Joint

Commission Meeting (JCM).

There are about 8,000 Iranian students studying in India. India provides 67

scholarships every year to Iranian students under ITEC, ICCR, Colombo Plan and

IOR-ARC schemes.

India over the years has emerged as one of the favorite tourist destinations for

Iranian tourists and every year around 27,000 Iranians visit India for various

purposes10

Indian community in Iran

The Indian community in Iran, which was sizeable earlier, has dwindled and now it

is a small one consisting of about 100 families in Tehran and about 20 in Zahedan.

There are a number of Indian students in Iran, approximately 1300, a large number

of whom pursue theological studies in Qom.

There is an Indian school run by the Kendriya Vidyalaya Sangathan in Tehran and

another in Zahedan.

In February 2011, India successfully outsourced the tourist visa collection in Tehran

to facilitate the visa services for Iranian tourists visiting India.

10 http://www.indianembassy-tehran.ir/

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Both countries hope for a successful outcome of first meeting of the Joint Working

Group on Tourism.11

Prime Minister Shri Narendra Modi's visit to Iran

At the invitation of the President of the Islamic Republic of Iran Dr. Hassan

Rouhani, Prime Minister Shri Narendra Modi visited Iran from 22 to 23 May 2016.

During the visit, the Prime Minister called on the Supreme Leader of Iran and held a wide

ranging discussion on subjects of mutual interest with President Dr. Rouhani. The two

sides exchanged views on bilateral relations, the evolving regional situation as well as

global issues of mutual interest and recalled the principles on development of bilateral

relations articulated in the 'New Delhi Declaration' of 23 January 2003. The leaders were

united in their determination to build a strong, contemporary and cooperative relationship

that draws upon the strength of the historical and civilisational ties between the two

countries. India and Iran inked a total of 12 agreements on economy, trade, transportation,

infrastructure development, culture, science & technology and academic cooperation.

Highlights of Prime Minister Narendra Modi's Visit to Iran12

1. The Chabahar Project agreement signed during Prime Minister Modi's visit intends

to deepen ties between Iran and India and will cost $500 million to develop.

2. The new port would allow India to access Afghanistan and Europe by

circumventing Pakistan.

3. India will invest billions of dollars in Iran following the removal of sanctions.

4. The two countries have also agreed to consult 'closely and regularly' on combating

the threat of terrori

11 http://www.indianembassy-tehran.ir/ India-Iran Relations-Indian Embassy. 12 www.dailymail.co.uk/indiahome by MAIL TODAY BUREAU PUBLISHED: , 23 May 2016 )

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List of Agreements/MOUs signed during the visit of Prime Minister to Iran (May 23. 2016)13

S.No Title of MoU Description

1. India-Iran Cultural Exchange Programme

The objective is to extend the CEP for the period 2016-2019 covering the areas of culture and art; radio, TV, mass

media and cinema; and relevant general and financial

terms.

2. MoU between the Ministry of External Affairs (MEA) of India and the

Ministry of Foreign Affairs (MoFA) of

Iran on Policy Dialogue between

Governments and Interaction between Think Tanks

The MoU seeks to create a Joint Secretary/Director General policy dialogue as well as encouraging new

institutional mechanisms between think tanks on both

sides. There is also a provision for a conference on

contemporary issues of regional and global significance.

3. MoU between Foreign Service

Institute, MEA and the School of

International Relations, Iran’s MoFA

This MoU is intended to enhance cooperation between the

two parties for training of diplomats and exchange of

eminent speakers.

4. Implementation Protocol between

Department of Science and Technology, Ministry of S&T and

Iran’s Ministry of Science, Research

and Technology on Cooperation in the Fields of Science and Technology

The IP fleshes out the specific cooperation between the

two sides pursuant to the 2003 MoU and covers areas like exchange of experiences, seminars, conferences etc.

5. MoU between Indian Council for

Cultural Relations and Islamic Culture

and Relations Organizations of the IR

Iran

The MoU provides for institutional mechanisms for

cooperation between ICCR and ICRO and lays down the

modalities for the cooperation.

6. Bilateral contract on Chabahar Port for port development and operations

between IPGPL [India Ports Global

Private Limited] and Arya Banader of Iran

The contract envisages development and operation for 10 years of two terminals and 5 berths with cargo handling

[multipurpose and general] capacities.

7. MoU between EXIM Bank and Iran’s

Ports and Maritime Organization

[PMO] oncurrent specific terms for the

Chabahar Port project

This MoU is intended for the purpose of credit of USD

150 million for Chabahar port.

8. Confirmation Statement between EXIM Bank and Central Bank of Iran

This confirms the availability of credit up to INR 3000 crore for the import of steel rails and implementation of

Chabahar port.

9. MoU between ECGC [Export Credit

Guarantee Corporation] Limited of

India and the Export Guarantee Fund of Iran (EGFI)

The MoU seeks to establish a framework of cooperation

between ECGC and EGFI in supporting and encouraging

foreign trade and foreign investment between India and Iran and, where appropriate, the supply of goods and

13 http://www.mea.gov.in/bilateraldocuments.htm?dtl/26841/List_of_AgreementsMOUs_signed_ May_23_2016#)

10

S.No Title of MoU Description

services from their respective countries as part of a project to a third country.

10. MoU between National Aluminium

Company Limited (NALCO) and the

Iranian Mines and Mining Industries

Development and Renovation Organization (IMIDRO)

The objective is for the two parties to jointly explore the

possibility of manufacturing aluminium metal by setting

up of a smelter on joint venture basis in Iran and/or

entering into tolling arrangements with smelters in Iran or any other form of business collaboration including sale of

alumina etc.

11. MoU between IRCON and

Construction, Development of Transport and Infrastructure Company

(CDTIC) of Iran

MoU will enable IRCON to provide requisite services for

the construction of Chabahar-Zahedan railway line which forms part of transit and transportation corridor in

trilateral agreement between India, Iran and Afghanistan.

Services to be provided by IRCON include all

superstructure work and financing the project (around USD 1.6 billion).

12. MoU for cooperation between the

National Archives of India and the

National Library and Archives Organisation of the Islamic Republic of

Iran

The aim to for facilitation of exchange of information and

knowledge in the field of archival matters through

exchange of manuals, guidelines, rules, publications and other special literature on archival topics.

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CHABAHAR PORT PROJECT

Iranian port of Chabahar (previously Bandar Beheshti), located on the Makran

Coast of the Sistan and Baluchistan Province of Iran criss-cross some of the most

important international corridors – East-West, North corridors, South corridor and

Transport Corridor Europe-Caucasus-Asia (TRACECA) and can be considered one of the

most strategic transit locations.

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 centers in South Asia (Mumbai, Jamnagar, etc), the Middle East

(Dubai), Central Asia (Turkmenistan) and Afghanistan (Milak).14

Iran plans to use this port for transshipment of a variety of goods - tea, eatables,

electronics, building materials, heavy equipments, etc. – to Afghanistan and Central Asia

and equally maintain the Bandar Abbas port as a major hub for trade with Russia and

Europe. From India’s point of view, the strategic importance of Chabahar is immense. It

not only gives access to the oil and gas resources in Iran but also provides access to

Central Asian Republics.

(http://www.dailymail.co.uk/indiahome/indianews/article-3605422/Modi-inks-500m-deal-develop-Iran-s-Chabahar-port-open-

India-s-trade-routes-Afghanistan-Europe-bypass-Pakistan.html)

14 www.acedamicjournals.org/AJPSIR (African Journal of Political Science and International Relations- India-Iran Relations:

Prospects and Challenges

12

India's involvement in the Chabahar port project is termed as a "peace project" and

"transit diplomacy"15

Conclusion

Iran is an important country in India's immediate 'economic and security space' with

India as a large and growing buyer of energy resources, and Iran being a major supplier

there is a good basis to construct a close energy cooperation relationship in future.16

Both

Iran and India have stakes in peace and stability in the region, which faces several

challenges including terrorism and violent extremism.

Prime Minister Shri Narendra Modi’s visit to Iran has imparted a timely impetus to

the ongoing efforts of the two countries and their business entities to expand bilateral

cooperation and mutually benefit from new opportunities in the wake of lifting of

secondary sanctions against Iran earlier this year. His visit to Iran is a turning point in

India-Iran relations and the beginning of new chapter in bilateral cooperations.17

15 Views expressed by Prof. Mandana Tishe Yar during the IPIS-VIF joint forum on March5,2016 in Tehran 16 Annual Report- 2014-15 Ministry of External Affairs Page No..49 17 IDSA: Issue Brief: Modi's visit to Iran: Will it provide a new momentum to bilateral relations

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References

1 http://www.indianembassy-tehran.ir

2 India Iran Historical Links Part I: http://www.indianembassy-tehran.ir

3 http://www.mea.gov.in -Joint Statement-Indian Embassy

4 http://www.dnaindia.com/..... source PTI 25 May 2016

5 http://www.indianembassy-tehran.ir India-Iran Relations-Indian Embassy-Commercial

Relations

6 http://www.indianembassy-tehran.ir India-Iran Historical Links

7 http://www.narendramodi.in/pm-modi-s-gift-to-iranian-president-dr-hassan-rouhani--

8 http://www.mea.gov.in -Joint Statement-Indian Embassy

9 www.dailymail.co.uk/indiahome by MAIL TODAY BUREAU PUBLISHED: , 23 May

2016 )

10 www.acedamicjournals.org/AJPSIR (African Journal of Political Science and

International Relations- India-Iran Relations: Prospects and Challenges

11 Views expressed by Prof. Mandana Tishe Yar during the IPIS-VIF joint forum on

March5,2016 in Tehran