Modi to visit Iran on 22-23 May

18 May 2016 | By Gaurav

Prime Minister Narendra Modi will visit Iran on 22-23 May, on a two-day trip that is expected to boost bilateral energy and trade ties.

The Ministry of External Affairs issued a statement saying Modi would be making the trip on the invitation of Iranian President Hassan Rouhani.

The visit is seen as an extension of Modi's West Asia diplomacy push.

In context: Modi's visit to Iran

Early TiesEstablishment of Indo-Iranian political ties

Jawaharlal Nehru established India's official diplomatic links with Iran on 15 March 1950.

During the Cold-War, relations were strained as Iran was a close US ally while India was a non-communist supporter of the USSR.

The Iranian Revolution of 1979 paved the way for re-negotiating Indo-Iranian relations.

India and Iran both supported the Northern alliance against the Taliban in Afghanistan in the 1990s.

Recent TiesGeneral direction of recent Indo-Iranian ties

As of 2015, there were over 8000 Iranian students in India and over 27,000 Iranian tourists arrive annually.

Political ties between India and Iran have significantly improved in defence and infrastructure development.

India and Iran are jointly developing the Chabahar Port, which will form the sea-link of the International North South Transport Corridor which will link India, Iran, Russia, Central Asia and Europe.

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18 May 2016Modi to visit Iran on 22-23 May

The delicate balancing act in West Asia

Modi's visit to Iran comes just after his visit to the Sunni kingdoms of Saudi Arabia and UAE, Iran's regional rivals. His Iran visit will be followed by visits to Qatar and the Jewish state of Israel, another one of Iran's regional rivals.
Whats on Modi's agenda for this trip?

Agenda Whats on Modi's agenda for this trip?

The Chabahar port development project will top Mr. Modi's agenda in Iran.

Among other issues on the agenda are agreeing on a channel for repayment of $6.5 billion in unpaid dues from India to appropriate corresponding banks in Iran.

Modi is also likely to discuss India's stakes in the Farzad-B gas fields.

Sources said India is also looking at doubling oil imports from Iran.

Chabahar PortIndia's role in the Chabahar port project

The success of this visit would be measured by Modi's ability to sign the much delayed Chabahar Port Project agreement.

The project was conceived 13 years ago and holds the key to changing the dynamics of India's relations with West Asia.

It is also a strategically important project to counter the dangers posed by the Sino-Pakistani Gwadar port project in Pakistan.

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Energy TiesEnergy trade with Iran is vital

From 2006 to 2012, Iran was India's second largest source of crude oil, accounting for almost 15% of the country's needs.

However by 2012, international sanctions against Iran's nuclear weapons program began to affect India's payment mechanisms for Iranian oil.

Trade gradually reduced and by 2014, Iran became India's 8th largest oil exporter accounting for only 6% of India's oil imports.

Sanctions lifted, trade easier, debts to be cleared

The Iranian nuclear agreement led to lifting of international sanctions against Iran. This has made resumption of trade easier; however, India has yet to repay over $6.5 billion in oil debt to Iran. India is likely to route the payment through Turkey's Halkbank.

21 May 2016India clears part of Iran's oil dues

Ahead of PM Narendra Modi's visit to Iran, the Indian government has cleared part of the $6.5 billion India owes to Iran for its oil payments.

State refiner Mangalore Refinery and Petrochemicals Ltd paid $500 million while Indian Oil Corp has settled $250 million through Turkey's Halkbank.

Sources were unable to confirm when the next instalment of payments would be made.

22 May 2016AIR launches Persian service in Iran

All India Radio's External Services Division is launching a multimedia website and mobile app with Persian services, to coincide with Prime Minister Narendra Modi's visit to Iran.

AIR is also starting a WhatsApp-based listeners' response forum, where listeners from Iran can directly interact.

AIR has been broadcasting to Iran in Persian language since 1941, one of its oldest external services.

24 May 2016Modi seals Chabahar deal in Iran

Prime Minister Narendra Modi signed a deal to develop Iran's Chabahar port, under which India would invest $500m for development activities.

India, Iran and Afghanistan also signed the tripartite Chabahar trade corridor pact that connects India, Iran and Afghanistan to Central Asia.

The agreement will not only increase India's exports to Central Asia, but also facilitate transport of gas from Central Asia to India.

25 May 2016US questions India's role in Chabahar

US senators raised questions on India's role in Iran's Chabahar port project and questioned whether the project violates any international sanctions.

Assistant Secretary of State for South and Central Asian Affairs Nisha Biswal said "We have to examine the details of the Chabahar announcement."

State Department officials said that they would "closely monitor" India's engagement with Iran to ensure there are no violations.