The recently concluded visit by Iranian President Rouhani to India was full of optics: his visit to the Qutub Shahi mosque at Hyderabad, then his address at the ORF (Delhi based think tank) hit all the right notes but if we look at the joint communique released at the end of the “substantive” talks we find that the visit accomplished less than what was being promised from both the sides.
The joint statement has laid stress on “connectivity”. It seems that the bilateral relations revolve around the port project and the subsequent advantages it will have not only for Afghanistan but to larger Central Asian Region. India has invested a lot of capital and now wants to benefit from the project, not only in terms of trade but also strategically. But if we closely follow the developments w.r.t. Chabahar, we find that the pace of development is sluggish. The port is only partially operational. India has been trying to develop the port as its answer to Gwadar and China’s Belt and Road initiative in the region by providing an alternate route for trade and commerce with Central Asia and Afghanistan. India’s biggest weakness lies not in striking of agreements and deals, but in follow-up and execution of those deals and projects. There are a large number of irritants which have repeatedly stalled the project.
The biggest irritant has been funding as well as the role international sanctions have played throughout this whole process. Despite our commitment to the project and its eventual realisation, India has been apprehensive about the US and its response to JCPOA; and its eventual impact on our investments in Iran. We have ignored the fact that French and German firms have made large investments and have been trying to court maximum areas for their benefit as Iran opens up its economy for international investment. The whole purpose of the visit was to enhance bilateral trade ties and the visit appears to have come short on the promise.
India has also not yet allowed Iranian banks to open their branches in India. However, in a welcome move, investment in Iran in Rupee terms has been allowed. The Indian investments in Rupees will get converted into Iranian Rial through banking mechanism allowing investments from here, including in the Chabahar Port complex.
The visit further failed to address the pending issue of ensuring Indian investments in the Farzad-B gas field. It was announced that India and Iran need to move away from the traditional buyer-seller relationship when it comes to the energy sector but no measure to finish decade-old negotiations on Farzad gas field has been announced. Instead, we hear that the pace of negotiations needs to be increased for enhanced energy cooperation. The delay in completion of Chabahar project, the roadblock over Farzad-B gas block should not be allowed to act as hindrances in the development of bilateral ties.
Although, the visit did achieve few things; the finalisation of the Double Taxation Avoidance Agreement is welcomed as a step that would promote business environment but both sides need to work on lowering bilateral trade tariffs: negotiations on Preferential Trade Agreement as well as conclusion of Bilateral Investment Treaty in a fixed time frame need to be accomplished.
The unanimity of thought on the security front was also witnessed. Both the countries have a common stance on confronting terrorism and extremism, and are determined to confront terrorism and extremism through cultural interaction and the exchange of information and experience.
The outcome from the visit is debatable but it cannot be denied that progress in the right direction has been made, however, the journey is far from over and we have a long way to go to accomplish our strategic goals in the region.
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)