India-Iran trade picks up riding on shared geopolitical interests

After a blip, trade between India and Iran is picking up as the two countries reboot their ties and strengthen connectivity with the operationalisation of the International North South Transport Corridor (INSTC). In April-May, Iran’s total non-oil exports stood at 21 million tons worth $7.513 billion, and that of imports at 4.732 million tons valued at $7.941 billion, Tehran Times reported. In this, India has now emerged among Iran’s top five export markets.

Interestingly, India and Iran are now focusing on non-oil trade.

India Briefing said that as a member state of the BRICS (Brazil-Russia-India-China-South Africa) block and the Shanghai Cooperation Organization (SCO), “India is critical to Iran not only in terms of trade, investment, and security, but also in Tehran’s broader vision of advancing a multipolar world order with its pivot to the East.”

The INSTC, envisaged to facilitate easier movement of freight between several countries including India, Russia, Iran, Afghanistan, Armenia, Belarus, Bulgaria, Kazakhstan, Kyrgyzstan, Tajikistan among others, is expected to give a further push to trade between New Delhi and Tehran.

Albeit a slow-starter, countries involved in the INSTC project are now aggressively working on fully operationalising it amid the geopolitical and geoeconomic risks.

New Delhi and Tehran, which are developing the Chabahar Port in southern Iran, have not been considered geopolitical rivals despite a rise in roadblocks.

India had halted imports from Iran in 2019 after the reimposition of sanctions on the oil rich nation.

However, last month National Security Advisor Ajit Doval during his visit to Tehran held several meetings with Iranian authorities. Iranian President Ebrahim Raisi who met Doval called for taking India-Iran ties to a “new level.” In April Iranian Defence Minister Mohammad Reza Gharaei Ashtiani too paid a visit to India to attend the SCO meeting.

“These high profile visits signal that both countries are keen to deepening ties and this will play out in the field of economy and security. We must understand that world order has rapidly changed in the last couple of years,” an analyst told India Narrative.

Recently, India also used the Chabahar Port in Iran to send wheat to Afghanistan.

Meanwhile, the two countries have already started work on setting up a robust rupee-rial payment mechanism to boost trade.

In 2018-19, bilateral trade between New Delhi and Tehran stood at $17.03 billion. However, after a continuous fall—in 2021-22, it dropped to $1.9 billion “But the dynamics between India and Iran are changing and trade is expected to pick up in the coming months,” the analyst said.

India’s main exports comprised rice and tea while Iran shipped goods such as nuts, ammonia, apples, pears, pistachios, dates and almonds among other items. Products including methanol, toluene, crude oil, liquified butane and propane, mineral base oil have also been coming into India from Iran.

Also read: Chabahar, SCO and BRICS — India and Iran work on deepening ties ahead of key summits and visits