Strategic move

EDITORIAL

You choose your friends but not your neighbours. India’s relations with Iran have to be shaped primarily keeping in mind the geopolitical realities of this region and the country’s vital commercial interests, including energy security. India, already surrounded by nuclear weapon states, China and Pakistan, surely wouldn’t like to have another country going nuclear in its neighbourhood. But, India cannot go by the tough economic sanctions imposed by the US and Europe against Iran. India has to protect its own interests and there is nothing wrong if it can benefit commercially from the US and European sanctions against Iran. The fact is that India does not have much of a choice but to seek a bigger pie of the Iranian market. India has to continue to import Iranian oil. India imports almost 12 per cent of its oil from Iran at a cost of over $ 10 billion a year. It does not have a viable alternative source. On top of it, India cannot pay for the Iranian oil in dollar or euro. So, it has to pay for the oil, essentially through the exports of Indian goods. Iran has agreed to accept 45 per cent of the oil bill in rupees. That means India can pay equivalent of some $5.5 billion in rupees annually. Iran has to use these rupees to import Indian goods. At present, Indian exports are less than $ 2.75 billion. That means that India must step up its exports substantially. The commerce ministry’s decision to send a large trade delegation to Iran to explore the possibility of exports of non-traditional items such as machinery, engineering goods, metals, pharmaceuticals and chemicals is, therefore, timely. But at the same time, there is widespread concern among Indian entities about attracting US and European sanctions themselves. Indian companies having substantial commercial interests in the western world would naturally be chary of getting into Iran. The second problem is of getting timely payments. Already, there are instances of payments delayed for basmati rice and tea exports. ECGC and RBI have to smoothen it out. In the 1980s, India lost a lucrative project export market in Iran because of Iran’s inability to pay for its imports in the wake of its 10-year war against Iraq. Having burnt their fingers once, not many Indian project exporters would be committing themselves in a big way now. India’s approach to the so-called Iran nuclear crisis has to be determined by its own assessment of the situation. India just cannot go by western assessments and be a party to measures they often decide unilaterally. Secondly, it’s been seen that economic sanctions invariably don’t work. They may hit a people and the country’s international trade partners, but do not go far in changing policies dictated from outside. India is, therefore, right in taking the stand that it has taken.