Indian Perspective on Iran-China 25-year Agreement

Iran is vital for India and China regarding energy resources and connectivity goals. Iran is a key to landlocked Central Asia, accessing Afghanistan and bypassing the Strait of Hormuz via the Chabahar Port. These are some of the central interests of China and India’s security and economy. Under the Trump administration, the U.S. imposed crippling sanctions on Iran, devastating Iran economically and isolating it internationally. Iran signed a 25-year agreement with China to counter the sanctions, joining the Belt and Road Initiative and countering economic and international isolation. 

The 25-year agreement and U.S. sanctions have pushed Iran towards the Chinese bloc. With tensions between the U.S. and China, and India seemingly aware of the Chinese threat, Indo-Iran ties are questioned. In recent years, India and China have had tensions. Since the Galwan Valley clash between the two countries in 2020 that led to the death of 20 Indian soldiers, tensions have remained high despite de-escalation talks (“Galwan Valley: A year after the violent clash,” 2021). India has also leaned towards the West to get support against China. The formation of the Quadrilateral Security Dialogue is an example of this. India and Iran have faced multiple obstacles in their relations, from the delayed funding for the Chabahar port project to Iran seemingly kicking India off the Zahedan railway project.

Despite such concerns, the 25-year agreement provides India with an opportunity to adapt and evolve its approach to Iran and West Asia. It is also essential to understand how India perceives the Iran-China agreement. Moreover, with public promises made to expand ties between Iran and India, India can also use this opportunity to strengthen its presence in the region, expand its sphere of influence, and ensure its interests are safeguarded.

“What does China’s 25-year agreement with Iran mean for India? How can India approach Iran, responding to the growing Chinese involvement in the country?”

Buzan and Wæver (2003) also work to categorize states into different types of powers: superpowers are “states that define the global level of polarity,” great powers are “states that are more powerful than a regional power and can project their power into a region outside their home region, but are not yet a superpower,” and regional powers where “states have the power to define the polarity within a regional security complex, but not much beyond that.” Globally, India is recognized as a great power due to its increasing role in South-East Asia. India has also started to carve out a more significant role in West Asia. As West Asia (notably, the Gulf subcomplex) and other neighboring RSCs join China’s Belt and Road Initiative, China is well-positioned to become a superpower that can tilt the world’s polarity. At the danger of being isolated or locked out of the region, India’s relations with Iran will determine the influence India holds in the region while solidifying its position as a great power in the region.

Primary and secondary data will play an essential role in the research, as the research question was built on the literature gaps. The primary data, such as documents, interviews, and statements released by government officials and government institutions, will be vital in researching Indian foreign policy, looking into its “Link West” policy, “Act East” policy, and its approach to Iran, West Asia, Central Asia, and China. Secondary research, such as articles, research journals, and analyses by scholars, will be necessary to learn more about China’s 25-year agreement, its developments, and the analysis done on the topic by other scholars and researchers. Due to the language barrier, relying on secondary research on China is vital.

Literature review

Iran-China relations: An overview

Iran and China have enjoyed a long history of relations best symbolized by the “Silk Road”. Iran and China shared close cultural relations; however, their relations decayed due to their colonial experience and marginalized global status. Under Shah Reza Pahlavi’s rule, Iran and the United States shared warm relations, and he saw Taiwan as the true representative of the Chinese people. On the other hand, China viewed Iran as a “mercenary of imperialism.” As China’s relations with the U.S. changed and normalized, so did the Sino-Iranian ties. After the Shah’s sister visited Beijing in 1971, the two countries established diplomatic ties. However, when the chairman of the Chinese Communist Party Hua Kuo-Feng visited Iran in 1978, right before the Islamic Republic came to power, Iran-China relations suffered early on after the Islamic Revolution (Shariatinia, 2011). 

Under the Islamic Republic, Iran adopted a “Neither West nor East” foreign policy. Relations between China and Iran remained unsteady. The Iranian government, wary of China’s relations with the Shah of Iran, was skeptical of China. However, that changed due to Iran’s strained ties with the U.S., sanctions placed by the U.S., its strained relations with USSR due to Iran purging leftist forces, and its war with Iraq. Iran turned to China, looking to come out of its “self-imposed isolation” for weapons and equipment. In 1985, Akbar Hashemi, considered to be Iran’s second most powerful figure, visited China to buy weaponry from China and set up strategic ties. After the Iran-Iraq war, the two countries expanded their relations to develop economic ties. China started investing in Iran’s infrastructure, helping Iran build power plants, cement factories, and the subway system in Tehran. Due to its growing economy, China demanded more oil and started importing oil from Iran. After the collapse of the USSR and the unipolar world order with the United States at the helm, Iran and China grew closer (Shariatinia, 2011).

China supported Iran’s initial nuclear program through the nuclear cooperation agreement by supplying resources and technology to Tehran. By 1993, the two countries established the Chinese-Iranian Joint Commission on Economic, Trade, Scientific, and Technical Cooperation (Walter, 2009). Since then, Sino-Iranian relations have grown significantly, with oil central to their relations. In 2020, Iran exported 300 to 500 thousand barrels of oil to China every day, according to the Iranian Plan and Budget Organization (“IRGC-Linked Fars Strongly Denies Iran’s Oil Exports To China Declined,” 2021).

Iran and China’s 25-year agreement

The Iran-China 25-year agreement was initially announced in 2016 when the President of China Xi Jinping visited Tehran. The agreement was announced when the sanctions were lifted off Iran after signing the Joint Comprehensive Plan of Action (JCPOA) in 2015. However, the agreement faced multiple obstacles, and no further details were released until 2021 after the Trump administration decided to unilaterally reimpose sanctions on Iran in 2018 as part of his maximum pressure campaign. While the initial agreement was slow, the Trump administration hastened the process, and the 25-year agreement between the two countries was signed in 2021 (Vatanka, 2021).

The agreement will reportedly see China invest up to $400 billion into Iran. As it has officially joined the Belt and Road Initiative, China will invest in various Iranian sectors, such as oil, transport, and other crucial industries of Iran’s economy. China will also assist Iran in developing green energy while continuing to increase its oil imports. Iran’s transport sector will be upgraded with newer technologies to upgrade inter-city and intra-city railroads. China will also develop the Port of Jask. Iran’s economy will be boosted through Chinese companies entering the Iranian market and employing Iran’s highly skilled workforce. Additionally, through the BRI, China hopes to “become a peace-broker” in the region and that the economic and connectivity projects will make the Shia-Sunni countries work together, creating space for dialogue and stability between them (Goulard, 2021). By creating such a dialogue between countries, China would be better able to protect its investments, increase its sphere of influence, and secure its interests in the region.

Understanding India’s “Act East” Policy

After launching the “Look East” policy after the fall of the Soviet Union, India’s “Act East” policy was the next step in the evolution of the previous policy. Narendra Modi launched the policy in 2014 to intensify strategic, economic, and diplomatic ties with Southeast Asian countries, especially with countries that share common interests and concerns.

To boost relations, India set up multiple forums, dialogues, and summits with South Korea and Japan, two pillars of India’s Act East policy. India sought economic support and investment from Japan by signing the comprehensive economic partnership agreement (CEPA). The Tokyo Declaration also enhanced Japan’s investment and support for India’s connectivity and infrastructural development, from communication to power, transport, and more. Japan also emphasized developing India’s Northeastern Region (NER). Japan has traditional interests in NER, and NER is also a gateway to Southeast Asian countries. India and Japan are also working together on multiple projects in different countries: Sri Lanka (developing LNG-related infrastructure), Myanmar (developing Rakhine state), Bangladesh (connectivity projects), and Kenya (health services) (Kesavan, 2020).

Strategic concerns with the decline of U.S. influence in the region, the rise of China, and its hegemonic aspirations led India to forge strategic partnerships with multiple countries, such as Indonesia, Vietnam, Malaysia, Japan, South Korea, and Australia. India has also advocated for an open, rules-based order in the region that is not affected by a hegemon. Additionally, India has made maritime security a vital part of its Act East policy (Kesavan, 2020). The Supply Chain Resilience Initiative (SCRI) launched by India, Japan, and Australia is part of India’s efforts to strengthen maritime security.

India’s “Look West” policy

West Asia has played a vital role in the Indian economy from essential oil imports to remittances. After the 1970s, Indians working in the region grew after the “oil boom,” resulting in the Ministry of Overseas Indian Affairs formation in 2004, when the Indian expats continued to grow. Launched by Manmohan Singh’s administration, India adopted a “Look West” policy, engaging with Iran, Israel, and the Gulf countries. In 2017, Modi visited Israel to sign agreements that ranged from agriculture, space cooperation, and development. Palestine visibly fell the pecking order for Indian foreign policy, despite India supporting Palestine during the Cold War. (Burton, 2019)

Indo-Iranian Relations

After the Islamic Revolution, Iran and India maintained strong diplomatic relations. The two countries continued high-level visits. In 2003, President Mohammad Khatami was the chief guest for India’s Republic Day celebration. During 2009-2010, India imported nearly $10 billion worth of crude oil from Iran while exporting $1.9 billion worth of steel, minerals, chemicals, rubber, and more. Culturally, India is a tourist destination for Iranian tourists, with nearly 40,000 Iranians visiting India every year. India and Iran are also part of the North-South Transport Corridor. India is working closely with Iran to develop Chabahar Port to facilitate faster trade between the two countries, shifting focus away from the Persian Gulf and bringing Indian commercial and strategic presence into the region (“Iran-India Relations”, 2021). Chabahar port has run into problems for both sides. In April 2021, Iranian Foreign Minister Javad Zarif stated that Chabahar port is not meant to take sides and is not built against the Chinese or Pakistan’s Gwadar Port. Iran also removed India from the Zahedan rail line project (Misra, 2021) due to payment delays and delays in starting work (Haidar, 2020). It was later announced that India continues to be a part of the project. For India, Iran links it to Central Asia, enhancing Indian security in West and Central Asia. Iran will also play a vital role in containing China (Burton, 2019).

In 2019, India stopped importing oil from Iran. This came after the waiver issued to India by the United States expired, forcing India to look for alternative fuel and energy sources (“India stopped importing Iranian oil after U.S. waiver expired: Envoy,” 2019). Moreover, in July 2020, India was dropped from Chabahar to the Zahedan railway line project by Iran after stating that there were delays in providing the funds to start the project (Haidar, 2020). On February 3, 2021, the Modi government stated that despite reports of Iran starting the project without India, India remains engaged with the Chabahar-Zahedan railway project. Additionally, the Union Budget announced for 2021-2022 presented by the Finance Ministry allocated Rs. 100 crores for the construction and development of the Chabahar Port (Nag, 2021).

Despite Iran and India being allied with opposing powers, the two countries have maintained ties. India’s External Affairs Minister, S. Jaishankar, visited the then-president-elect Ebrahim Raisi to strengthen ties between the two countries and attended his swearing-in ceremony. Additionally, both countries share concerns over the Taliban’s control over Afghanistan and have often discussed how they could cooperate (Haidar, 2021).

Gaps in the Literature

An apparent gap in the literature available is how India perceives the Iran-China relationship and the 25-year agreement. There is little research into Indo-Iranian relations post the 25-year agreement and how it affects India’s standing in West Asia and Central Asia. Moreover, there is a gap in India’s opportunities through the agreement and ways it can expand its relations with Iran to counter China’s growing influence. Despite signing an agreement with China, the 25-year agreement is just a “roadmap” for investments in trade, transportation, and the private sector, according to Iranian foreign ministry spokesman Saeed Khatibzadeh (Staff, 2021).

For India, Iran is key in expanding its influence in West and Central Asia. Additionally, with Iran joining BRI, India will have to drastically change its approach to Iran and the West Asian region. Iran remains central to India, despite Iran joining other Gulf states in BRI. Seventeen countries from West Asia have signed up for BRI (Sacks, 2021).

China’s engagement with the region has been increasing over the years. In 2020, it was reported that China’s trade with the Gulf Cooperation Council (GCC) stood at US$170 billion. India traded US$20 billion with GCC during the same year. China, through BRI, has started to cooperate with Gulf countries over public health security, defense and nuclear technology. India, on the other hand, has used its diaspora and expat community in the Gulf to build relations, institutionalizing strategic dialogues that are held frequently where the two discuss cooperation on political, economic, and military matters (Kutty, 2020).

India’s policy towards West Asia can learn from its Act East policy, borrowing from the framework and learning from its successes and failures. Chabahar Port’s role in expanding Indian influence in the region and providing a strategic presence that will strengthen Indo-Iranian relations over its Afghanistan policy will be necessary. Since Taliban-controlled Afghanistan presents a problem to both countries, with concerns over Afghanistan becoming a “safe haven” for Sunni extremists, drug trade emerging from Afghanistan, and the need to protect its investments in the region. All these problems provide a realm for India and Iran to cooperate. China has been holding talks with the Taliban but so has Iran (“China, Taliban hold talks in Kabul,” 2021).

The foreign ministers of Afghanistan, China, and Iran met in China recently, where Iran expressed the need to support Afghanistan. Iranian foreign minister Amir-Abdollahian stated that rebuilding Afghanistan should be a priority (Neighbors Should Join Hands to Help Rebuild Afghanistan: Iran, 2022). Iran has stated that it will not officially recognize the Taliban unless they form an “inclusive” government. Iranian Foreign Ministry spokesman Saeed Khatibzadeh said that talks between the two countries are still positive, despite clashes at the border that both sides called a “misunderstanding.” Iran also called upon the United States to lift sanctions on Afghanistan so that essential humanitarian aid could be delivered to the people of Afghanistan (Motamedi, 2022a).

India’s relationship with the United States and other western countries will also play an essential role in India’s West Asian policy. Such a policy change will push India’s foreign policy to play an active role in West Asia. As the U.S. takes a “hands-off” approach to its foreign policy in West Asia, India playing a more significant role in the region will reduce the pressure on the United States and increase India’s sphere of influence.

Analysis

India-China Relations Since the Galwan Valley Clash

In June 2020, Indian and Chinese military forces clashed in a disputed Himalayan border region of Ladakh called Galwan Valley. The clash between the forces left nearly 20 Indian soldiers dead with many more injured, while casualties on the Chinese side are unknown (BBC News, 2020). Experts often see the violent clash between the two armies as a “tipping point” in Indo-China relations. Hu Shisheng, the director of the Institute of South and Southeast Asian and Oceanian Studies at the China Institutes of Contemporary International Relations, agrees with this sentiment by calling the clash the “lowest point” of Indo-China relations since 1962 (Shisheng & Jue, 2020).

Both India and China blame each other for the clash at the Galwan Valley border. Shivshankar Menon, the former Foreign Secretary of India, describes a shift in the Chinese behavior by changing the status quo at the Line of Actual Contro (Menon, 2020). Shisheng (2020), on the other hand, describes India as adopting more rigid policies and stance against China in their “long-term pursuit of absolute security and dominance in the regional order, but also the intention of Modi’s government to overtake China….”

Jaishankar and the Ministry of External Affairs (2021) noted that even before the Galwan Valley clash, Indo-China relations had their ups and downs. The polarity of cooperation and competition characterizes Indo-China relations. One-sided trade increased, with India facing an increasing trade deficit with China. China gained increasing access to Indian markets, while equal access to Chinese markets for India was restricted. Outside of the economy, China also openly opposed India’s membership in the Nuclear Suppliers Group. China blocked Indian attempts of listing Pakistani non-state actors involved in attacks on India on the UN terrorist list. These non-state actors were involved in the 2009 Mumbai attacks that killed 164 people. Jaishankar believes that the India-China relationship is at a crossroads (Jaishankar & Ministry of External Affairs, 2021).

India-China Foreign Policy Changes and Perceptions – China

China’s foreign policy primarily revolved around “keep low and bide time,” introduced by Deng Xiaoping during his rule between 1978 and 1989. By prioritizing its relationship with the United States, China built a significant market economy, which allowed its extensive involvement in international affairs. The 2008 global financial crisis, while hitting the Chinese economy, was also better handled by the Chinese state-run model in comparison to the liberal economic model of the U.S. The Chinese economic model provided an alternative to the United States of America model that dominated international politics in the post-Cold War era. The financial crisis elevated China’s status in international politics, and there was a worldwide recognition of the weight that China’s economy carried (Xinbo, 2010).

Under Xi Jinping’s leadership, China reworked its diplomatic approach. China shifted from yanghui [keeping a low profile] strategy to a fenfa youwei [striving for achievement] strategy, prioritizing building relationships based on shared interests rather than mutual trust (Zhao & Gao, 2015). During this period, the United States of America also announced that it would be “making a pivot” towards Asia and focus on building its relationship there. China expressed concerns over the United States pivot and saw it as an attempt to contain China’s growing influence in the region. The United States’ willingness to build and expand relations with India, where previously its relationship was strained, further added to China’s suspicion that the U.S. planned to contain China (Gokhale, 2021).

Chinese scholars and academics viewed India as an important neighbor. While the two countries had bilateral issues, China majorly did not see India as a strategic concern, and hence India had a minor role in influencing China’s foreign policy (Jian, 2018). However, China’s fenfa youwei [striving for achievement] strategy did have implications for India. China, building relationships with countries based on mutual economic interests while also establishing strategic credibility, led to the creation of the Belt and Road Initiative (BRI). The implications of this will be further explained in the following paragraphs.

China’s perspective on India also started changing when BJP came to power in 1990 and when the Modi administration won the elections in 2014. China saw increasing assertiveness from India’s side, especially under Modi’s leadership, who would be upfront with his dissatisfaction with the China-Pakistan Economic Corridor (CPEC) (Jacob, 2017). China perceived India’s unwillingness to understand the Belt and Road Initiative to enhance and increase regional stability as means to seek confrontation (Chung, 2017). This further evolved into seeing India actively looking to deny China’s strategic objectives in the Indo-Pacific. By abandoning its traditional, strategic roots of non-alignment and strengthening its ties with the West, India attempted to elevate its status to great power, which came at the cost of Indo-China relations (Chaturvedy, 2017; Ying, 2018). As Ying (2018) puts it, by adopting an assertive approach, India has taken up the “Modi Doctrine” strategy. The “Modi Doctrine” focuses on South Asian countries and increasing their economic and social development by promoting regional integration and connectivity through cooperative frameworks. The Doctrine also emphasizes that India is increasing its sphere of influence from South Asia and Indo-Pacific to West Asia. The “Modi Doctrine” objective is to push India into a great power position and provide competition to China (Ying, 2018). 

India-China Foreign Policy Changes and Perceptions – India

India-China relations started on a positive note. Soon after Indian independence, India recognized the People’s Republic of China and was the first country to establish diplomatic relations with China in 1950. This was soon followed by the then-Prime Minister of India Jawaharlal Nehru visiting China in 1954 (Ministry of External Affairs, 2020). This was short-lived, however, as China attacked India in 1962. A common perspective in India is that the attack utterly blindsided India, and the war ended a month later after China announced a unilateral ceasefire. The attack came after India protested the annexation of Tibet by China, and China perceived India as interfering in China’s affairs by providing asylum to a fleeing Dalai Lama (India Today, 2018). However, upon deeper inspection, this narrative was countered by Neville Maxwell’s India’s China War release that referred to a Henderson-Brooks-Bhagat report. The Henderson-Brooks-Bhagat report assessed the Indian army during the India-China 1962 war, seeking to understand what was wrong before and during the confrontation. Maxwell’s India’s China War with the Henderson-Brooks-Bhagat report concluded that India was the aggressor at the border, adopting a forward policy at the border that was adopted late in 1962 (Jha, 2022). It took 26 years for the two countries to stabilize their relations, with Prime Minister Rajiv Gandhi visiting China in 1988 (Jaishankar & Ministry of External Affairs, 2021).

Both India and the People’s Republic of China made genuine efforts to come to a settlement over their border. In 2003, the two countries signed “the Declaration on Principles for Relations and Comprehensive Cooperation between India and China”. The two sides also reiterated their commitment and dedication to the Five Principles of Peaceful Co-existence, Agreement on the Maintenance of Peace and Tranquillity along the Line of Actual Control, and Agreement on Confidence Building Measures in the Military Field along the Line of Actual Control signed in 1993 and 1996 respectively (Ministry of External Affairs, 2005). Despite stabilizing the border for the moment and cooperating over the border question, India was aware that it would be involved in a long-term rivalry with China. The government understood that Indo-China relations will always have a duality: competition and cooperation (Menon, 2016).

China proved to be a problem for India’s foreign policy and its core concerns. In 2013, when Chinese Premier Li Keqiang visited Pakistan, he brought on the idea of CPEC. The corridor would connect Xinjiang with the Pakistani port of Gwadar. The proposed corridor would connect the two through roads, providing Pakistan with economic infrastructure and passing through India’s claimed sovereign territory (Bhattacharjee, 2015). Nearly a year after signing the Declaration on Principles for Relations and Comprehensive Cooperation between India and China, China laid territorial claims on Arunachal Pradesh and labeled it southern Tibet (Dutta, 2008). Coupled with the unequal access to Chinese markets, rising trade deficit, blocking India’s attempt at adding Pakistani non-state actors to the UN terror list, and increasing assertiveness at the LAC, India felt increasingly frustrated with China.

India went from non-alignment to multi-alignment. Non-alignment was India’s strategic tool to avoid becoming part of the US bloc or the USSR bloc while promoting its interests. India would strategically lean towards the USSR when the US supplied arms to Pakistan. In the post-Cold War era, with the United States as the sole superpower, non-alignment became superficial. India shifted towards multi-alignment and switched to building relations with multiple countries (Raghavan, 2017).

Regional Security Complex Theory and Indo-Chinese Relations

Barry Buzan and Ole Waever’s South-Asian complex is characterized by India-Pakistan relations and hostilities. As Buzan (2002) states, the India-Pakistan rivalry was born out of religious differences and the subsequent Congress-Muslim League division during the British colonial rule of India. The Muslim League demanded Pakistan, a country for Muslims, whereas Congress wanted a united, multireligious, multicultural nation. Due to the partition of India based on religious identities, the two countries have had multiple wars (1947-48, 1965, 1971). Since the independence of the two states, both have significantly influenced each other’s security and foreign policy. Buzan and Wæver (2003) describe a regional security complex as having “stable patterns of security interaction between actors”. While interactions between actors from different regional security complexes are relatively low, actors’ interactions within a regional security complex are high. Security dynamics within a regional security complex are unique and durable. 

During the Cold War era, India and Pakistan were constantly competing. This competition was characterized by an arms race between the two states. While India chose to be part of the Non-Alignment Movement, Pakistan was quick to join forces with the United States of America. The USA also saw Pakistan as an ideal ally during the Soviet invasion of Afghanistan. As part of the western bloc, the US supplied arms to Pakistan. During this period, China was also supplying weapons to Pakistan. In need of allies, despite being part of the Non-Aligned Movement, India grew closer with USSR (Buzan, 2002).

In 1971, India and the USSR signed the “Treaty of Peace, Friendship, and Cooperation”. Under the treaty, India had a security safety blanket against Pakistan’s growing threat, especially after the growing tensions and mass violence in East Pakistan that led to a massive exodus of people looking for shelter in India (Katju, 2021). Article IX of the treaty read: “[i]n the event of either Party being subjected to and attach or a threat thereof, the High Contracting Parties shall immediately enter into mutual consultations in order to remover such threat and to take appropriate, effective measures to ensure peace and the security of their countries.” (Ministry of External Affairs, 1971).

In the Post-Cold War era, after the disintegration of the USSR and the subsequent downward trajectory of the Indian economy, India-Pakistan relations significantly changed. As India underwent liberalization, its’ economy started growing, and the United States’ attitude towards India also shifted. Pakistan began losing its credibility as a balancer of India as India began outperforming Pakistan in every field, whether it be political, economic, or military. Pakistan no longer balanced India in the South Asian complex, as without the military support of the U.S. against India, it stood no match to it. As India outgrew Pakistan, a new rival entered the ring (Buzan, 2002).

India’s increasing rivalry and unsteady relations with China can be justified by India’s quest to become a great power. Great powers are states that “are more than just regional powers.” They often interact with neighboring regional security complexes due to interests in that region, have the material capabilities, and are recognized by other great powers in/around the world as a great power (Kapur, in press). While India’s role in the region was recognized globally, China either ignored India’s attempts at matching up against them or downplayed their rise. Chinese authorities argued that India is not a great power. Using its socio-economic features, China argued that India was not a great power due to its high poverty levels, social inequality, low per-capita income, increasing indebtedness, and increasing Hindu-Muslim divisions (Gokhale, 2021). Pröbsting (2020) argues that India’s economic output falls behind multiple countries. He states that there is a wide discrepancy between India’s high population and economic strength. He points out that India’s contribution to global GDP is at 3.2%, compared to China’s 14.5%, a direct rival to India. Furthermore, he states that India has one-third of the world’s poorest population. Reports suggest that more than 40% of the Indian population lives in under $US 1.25. Such criticisms seemed to hold weight and work in favor of China when Subramanian (2019), former Chief Economic Advisor of India, revealed that India’s GDP growth estimates in 2011-2012 and 2016-17 were inflated by 2.5%. He stated that the methodology used by the government was faulty.

Despite this, India has started to carve out a more significant role in Southeast Asia. India’s “Act East” policy is an example of India interacting with neighboring security complexes to promote economic, cultural, and strategic relations. India sought to strengthen relations with countries based on shared interests and mutual benefit. Kesavan (2020) argues that India’s “Act East” initiative was aimed to bring together countries against China’s growing economic and military footprint in the region. Through many institutional mechanisms, such as the annual summits, strategic dialogues, defense dialogues, and more, India built a strong partnership with countries based on energy cooperation, counterterrorism, UN reforms, cyber security, and maritime cooperation (Kesavan, 2020).

India’s pivot to the east, combined with an increasing presence of the United States of America in Asia and its growing closeness with India, China feels threatened. It grew anxious and saw this as an attempt at containing its rise. By strengthening its ties with Asian countries, China sees the United States as attempting to increase its strategic presence and supremacy in the region, and therefore, be able to block important sea choke points, such as the Malacca Strait (Saeed, 2017).

Iran, the 25-year agreement and its role in Indo-China competition

As mentioned earlier, Iran has historically shared good ties with India and China. While Iran distrusts China and has unstable relations during regime changes, specifically when the Islamic Republic came to power, Iran was forced to develop and strengthen relations with China due to the sanctions placed by the United States. Iran’s “Neither West nor East” policy was forcibly changed to “Not West” to buy weaponry and develop economic ties with China to cope with the economic sanctions and international isolation that were brought along with it (Shariatinia, 2011). Cheap Iranian oil is central to Sino-Iranian ties, with Iran receiving investments into its infrastructure, economic benefits, and COVID-19 vaccines during the pandemic (“IRGC-Linked Fars Strongly Denies Iran’s Oil Exports To China Declined,” 2021). Khatinoglu (2022) reports that China has imported more than $20 billion worth of Iranian crude oil and other byproducts, buying more than 850,000 barrels in 2021. Costing $70 per barrel, China bought more than 300 million oil barrels in 2021. China severely underreports its oil import from Iran due to the United States sanctions against Iranian petrochemical companies and the Revolutionary Guards, deemed a terrorist organization by the Pentagon, the U.S. Department of Defense (Khatinoglu, 2022).

India and Iran have maintained good ties since the Islamic Revolution. Like China, oil imports have been an essential part of India’s relationship with Iran. During the financial year 2018-2019, Indo-Iranian trade peaked at US$17.03 billion (Bharadwaj & Cyrill, 2021). As India’s demand for oil increases, Iran is the perfect partner for India. The same increase in demand for oil and Iran is the perfect partner for China.

After the United States of America, under the Trump administration, pulled out of the Joint Comprehensive Plan of Action (JCPOA), it started a maximum pressure campaign. The maximum pressure campaign brought heavy sanctions against Iran: Iran has been left with a crippled economy and international isolation that the COVID-19 pandemic has exaggerated.

On January 15, 2022, Iranian Foreign Minister Hossein Amir-Abdollahian announced that Iran-China’s 25-year agreement had entered the implementation stage. Hossein Amir-Abdollahian visited China earlier this year to discuss the agreement, trade, security, and the COVID-19 pandemic (Motamedi, 2022). The 25-year agreement between Iran and China comes at a perfect time for Iran. By pulling out of JCPOA, the Trump administration pushed Iran toward China. While the deal was initially announced in 2016, the agreement solidifies Iran’s tilt toward China as Iran realizes that the US is not a reliable partner. For India, the 25-year agreement gives it great concern over the availability of access to Iranian oil and natural gas reserves in the future.

As China plans on investing nearly US$400 billion in Iranian infrastructure, Iran would be forced to prioritize its relations with China over its relations with India, as China has deeper pockets and India has been ambiguous with its relations with Iran. That being said, the US$400 billion seems to be an unsourced and unrealistic figure. Duggal (2021) writes that Chinese Foreign Direct Investment (FDI) in 2018 to Iran was just US$3.23 billion.

China has a solidified position in the Gulf subcomplex through its Belt and Road Initiative. Iran joins Iraq, Saudi Arabia, Oman, Yemen, United Arab Emirates, and Qatar in China’s Belt and Road Initiative. The Belt and Road Initiative has become a global strategy for China, with 139 countries joining the BRI, which accounts for more than sixty percent of the world’s population and over forty percent of the global GDP (Sacks, 2021). With Beijing’s deep pockets providing much-needed economic relief, combined with the expansive network of countries it has in the Belt and Road Initiative, Iran has been handed a free pass over the sanctions that the West might impose in the future.

The current state of Indo-Iranian relations

Leaders from India and Iran have stated that they wish to expand and strengthen their ties, forging closer ties in oil, industrial, agricultural, and trade domains. New Delhi and Tehran are also willing to start a credit line to facilitate economic growth and trade and have also expressed common concerns over Afghanistan and the need for stabilizing the region (Tasnim News Agency, 2022). A similar sentiment was also expressed by the then-president elect Ebrahim Raisi and the Indian Minister of External Affairs S. Jaishankar, who met soon after the elections to discuss Indo-Iranian ties and the importance and need of expanding them (Haidar, 2021).

Former Iranian diplomats shared their insights over Indo-Iranian relations at a conference and mentioned that their ties are not as promising as one makes them out to be. The conference, titled “Cooperation between Iran and India in Chabahar: From idea to reality”, was held by Iran’s Institute for Strategic Research (ISR), where former Iranian Ambassador to India Seyed Mehdi Nabizadeh, former Iranian Ambassador to Pakistan Mashallah Shakeri, and Jafar Haghpanah from the Regional Studies department at Tehran University spoke. Rahim Bayazidi was also part of the panel. Bayazidi is the director of the International Relations Department at ISR. While leaders from both countries have expressed concerns over Afghanistan, the former diplomats played down Indo-Iranian views on Afghanistan, stating that the two countries do not look eye-to-eye on the Taliban issue. The experts mentioned that outside actors have always influenced India’s view on the Taliban and Afghanistan (Pourmohammadi, 2020).

Bayazidi started by stating that international actors have always influenced Indo-Iranian relations. In recent years, India has sided closely with the United States of America, which has come at the cost of slowed Indo-Iranian ties, resulting in reduced cooperation between the two countries. Additionally, India has participated in the Trump administration’s maximum pressure campaign, bringing down Indo-Iranian trade to its lowest ever. Despite that, Iran should build strong relations with India, as the Chabahar port is central to their ties. However, Seyed Nabizadeh stated that Iran should not compromise its ties with other countries such as Pakistan or China just to fill the needs of India (Pourmohammadi, 2020).

Mashallah Shakeri, speaking on Chabahar port, stated that Chabahar port is far better off and well equipped to handle large cargo. He claimed that compared to Gwadar port, Chabahar port handles eight million tons of cargo each year and is capable of mooring large ships with high cargo holding capacity, unlike its Pakistani counterpart. Additionally, the Gwadar port’s drinking water, electricity, airports, and road facilities are lacking compared to Chabahar port. Shakeri believes that Chabahar port is years ahead of Gwadar port, and Pakistan is trying to seek further investments from China by spreading propaganda over the Gwadar port’s capabilities and importance. However, Shakeri mentioned the slowness of investments for the Chabahar port and the increasing costs that the Islamic Republic is forced to carry (Pourmohammadi, 2020). Additionally, he mentioned that Afghanistan has also expressed concerns and frustrations over the slow development of Afghanistan. In order to increase the effectiveness of the port, Shakeri mentions that Chabahar port should be expanded to include railroads and roads that connect the inner lands of Iran and Afghanistan (Pourmohammadi, 2020).

Iran has also criticized India for its treatment of Muslims under the Modi administration. Ayatollah Khamenei, Iran’s supreme leader, criticized India for its scrapping of Article 370 and the subsequent introduction of the Citizenship Amendment Act (CAA) and National Register of Citizens (NRC). In 2021, after an explosion outside of the Israeli embassy in New Delhi, the Indian authorities found that the Quds forces, an elite wing of the Islamic Revolutionary Guard Corps, were behind the bombing, causing a further rift between Iran and India (Misra, 2021).

Limits to China’s approach and what that means for India

China projects its power in West Asia through its Belt and Road Initiative. Based on our empirical observations, China could be hoping to create a supercomplex of the Chinese and Gulf subcomplexes. China hopes that by integrating West Asian countries, and more specifically the Gulf, into BRI, the economic benefits would be enough for the countries to “get along”. As mentioned earlier, by acting as a “peace-broker” in the region and bringing stability to the region, China would be able to protect its investments in the region and increase its sphere of influence. China hopes to change the security dynamics of the West Asian complex, and specifically the Gulf subcomplex. However, the security dynamics of the region are unlikely to change. As the theory states, “[s]ecurity features at the level of regions are durable. They are substantially self-contained not in the sense of being free-standing, but rather in possessing a security dynamic that would exist even if other actors did not impinge on it.” (Buzan & Wæver, 2003)

The Cold War showcased how security dynamics continue unchanged, despite the direct impingement of superpowers in the region. In West Asia, enmities between Israel, Iraq, Arab States, Iran, and others have traditional and historical roots. China’s economic might, however big and tempting, is unlikely to change the security dynamics of the Gulf subcomplex. Moreover, China’s Belt and Road Initiative is a global strategy. China has good relations with Iran’s regional rivals, from Israel to Saudi Arabia. While criticizing the Western sanctions on Iran and the slowness of a new JCPOA deal, China has been in line with the United States and its position on Iranian nuclear weapons. China has also been a significant player in the Vienna negotiations (Figueroa, 2022). China has chosen not to store all of its eggs in one basket, instead has decided to spread them across different baskets. This global strategy and approach limit its focus on Iran and perhaps the Gulf subcomplex.

Projecting its power in Iran and the Gulf subcomplex will be a more significant challenge for India. India’s “Look West” to “Link West” policy will have multiple obstacles to it, despite having its predecessor “Act East” to learn and grow from. India’s “Act East” policy worked because it was based on mutual interest and concerns over China’s growing economic and military strength in the region (Kesavan, 2020). India will have a tough time convincing Iran, or the larger Gulf subcomplex, of China’s threat. 

However, Prime Minister of India Narendra Modi has spent a significant amount of time cultivating ties with the Gulf countries under the new policy of multi-alignment. Countries across the Gulf region share good ties with India, specifically the Arab states, as these countries are sources of large remittances, and the substantial Indian expat community that lives in the Gulf, maintaining strong ties with the region has become its national priority. India has strong ties with Saudi Arabia as well, a strong rival of the Islamic Republic. This could prove to be a severe issue for Indo-Iranian ties in the future. That being said, Iran is unlikely to fall down the Indian foreign policy priorities list. As mentioned earlier, Iran is a source of cheap oil and provides access to not just the landlocked Central Asian countries but also Afghanistan, bypassing Pakistan.

As Barry Buzan predicted, from 2011, the world has moved towards decentered globalism – a world order where there are no superpowers and multiple great powers (Kapur, in press). Due to the declining influence of the United States, the “hands-off” approach it has decided to undertake and the way Afghanistan exit was handled by the U.S. its influence across the globe has been dwindling.

Globally, India is recognized as a great power in the Indo-Pacific region. For many western countries, such as France, India is essential in balancing China and having a presence in the Indo-Pacific region. While it may seem like India is forging closer ties with the United States, India’s abstain vote on the Ukraine resolution against Russia for the current Russian war on Ukraine (India Abstains 6th, 7th Time in UN Vote on Ukraine Crisis Resolution, 2022) showcases its commitment to its multi alignment policy. India can use this to show Iran that it is a reliable partner, not influenced by outside actors and that it is stepping out of the U.S.’s shadow.

Expanding Indo-Iranian Relations

Due to Iran’s significant hydrocarbon and oil reserves and geographical location, it plays a vital role for India and China in their energy trade, connectivity ambitions, and access to landlocked Central Asia. Due to India’s unique position with the West, which can be used as leverage, India can increase its ties with Iran, convincing countries like the United States that a growing Indian role in the region will complement its “hands-off” approach. An active India would mean that the United States would have to spend less blood and money in the region while obstructing China’s growing influence. Unlike China, India could use this opportunity to promote dialogue between the West and Iran as a neutral third party for the JCPOA negotiations and bring normality back into Iran’s economic systems while also assisting them in being reintegrated into the international system (Nair, 2021). Due to India’s policy of multi-alignment, the West will be able to place its trust in India to keep Iran in check, while simultaneously, Iran will be able to trust India to advocate for Iran.

While the 25-year agreement between Iran and China is an obvious challenge for India, it is essential to note that the US$400 billion that China plans on investing in Iran is just a roadmap (Fallahi, 2021). Despite the agreement entering the “implementation” stage, India can step up and expand its commitment to Iran through the Chabahar port. As China’s Belt and Road Initiative is a global strategy, delays in investments and construction will happen in Iran. India could use this opportunity to commit additional resources to Chabahar port. Chabahar port is important for both India and Iran as it will provide access to landlocked Central Asian countries and make Iran a transit hub. Additionally, it will focus the strategic shift away from the Persian Gulf to the Gulf of Oman. The Persian Gulf and the Strait of Hormuz are often theatres of conflict between the Islamic Revolutionary Guard Corps and the U.S. military and its allies. This region is also dangerous for shipping vessels as they are often attacked and sunk (Iran Opens Oil Terminal to Bypass Strategic Strait of Hormuz, 2021). Chabahar port will allow Iran to override the Strait of Hormuz, reducing shipping costs and time and giving Iran the strategic advantage to limit movement through the Persian Gulf (Saleh & Yazdanshenas, 2020).

India could also integrate Iran into its Supply Chain Resilience Initiative (SCRI). SCRI was announced by the trade ministers of Japan, Australia, and India in September 2020 after all three countries shared their concerns over excessive reliance on China. The three countries are working on strengthening alternate supply chains to undercut China’s control over the trade of essential supplies. SCRI also aims at protecting maritime security and freedom of the seas (Rajagopalan, 2020). Recently, Japan announced its plans to invest up to US$42 billion into the Supply Chain Resilience Initiative over the next five years in India. The announcement came after the 14th India-Japan Annual Summit (FE Bureau, 2022).

As both Australia and Japan share good ties with Iran and have spoken about the need to strengthen their ties (Sinaiee, 2021; Australian Government Department of Foreign Affairs and Trade, 2022), India could work with Australia and Japan to include Iran in SCRI. This will enable additional protection in India’s Chabahar Port, increasing India’s strategic presence in the region while providing Iran with options to prevent over-dependency on China and giving it more options out of diplomatic and international isolationism (Nair, 2021).

Afghanistan also proves to be another realm where India and Iran can cooperate and expand their relations. As Iran shares a 900km long border with Afghanistan (Taliban Captures Key Afghan Border Crossing with Iran: Officials, 2021), which is now under the control of the Taliban, waves of refugees have been fleeing Afghanistan. The United Nations High Commissioner for Refugees (UNHCR) estimated that by the end of 2020, there were close to 2.8 million Afghan refugees, with Iran and Pakistan hosting a majority of Afghan refugees. Additionally, Iran has been a preferred destination for Afghan refugees due to the cultural and traditional commonalities and the 900km border they share (Aman, 2021). The influx of refugees will only add to Iran’s economic strain; India could extend financial help, rehabilitation support, and material resources to Iran. This will help ease the pressure off Iran’s economy. Additionally, as the Taliban hopes to reinvigorate Afghanistan’s economy, Chabahar port will enable the Taliban’s access to open seas, reduce shipping and logistical costs, and increase trade and connectivity (Nair, 2021). By providing support to Iran with the influx of refugees, India would expand and strengthen its ties with Iran. As a great power looking to project itself into neighboring RSCs, providing aid to refugees, as well as increasing its engagement with Afghanistan through the Chabahar Port would solidify India’s position as a great power.

Conclusion

Understanding the current ties between India-China relations requires a more profound, historical overview of their ties. The paper showcases that historically China did not see India as a competition or a hindrance to its national security. That changed when India’s relations with the United States of America warmed, India became increasingly assertive and upfront with its demands and needs, it started implementing the “Act East” policy, and the U.S. pivoted to Asia. On the other hand, since the 1962 war, India has always approached China with caution. Indo-China relations always have a duality to their relations, highlighted by competition and cooperation.

By adopting Regional Security Complex (RSC) as our theoretical framework, the paper establishes that the recent Indo-China competition is highlighted by India’s status as a great power in the region. As India started to supersede the Indo-Pakistan rivalry in the South-Asian complex and grow into the region as a great power, it started to challenge the other great power in the region, China. As great powers, by definition, project their power on other RSCs, the Gulf became a natural theater of competition for the two countries. Like India and China projecting their powers in South-East Asia to secure their interests, the Gulf subcomplex has become increasingly crucial for both India and China. By bringing Gulf countries into the BRI, China’s logic is that it would act as a “peace-broker” in the region, providing investments in return for stability. Through stability, China’s global strategy and sphere of influence will increase, and its investments will be protected. However, as the Regional Security Complex Theory states, a regional complex or subcomplex’s security dynamics are unlikely to change even when a great power impedes it.

Iran is important for both countries as it is a source of cheap oil and provides access to Central Asia’s landlocked states. For India, specifically, Iran is necessary to bypass Pakistan and access Afghanistan. For China, bringing Iran serves its global Belt and Road Initiative strategy. While China has signed Iran, Afghanistan, Pakistan, and other states into its Belt and Road Initiative, India needs to expand its relations with Iran through the Chabahar Port to increase its regional strategic and economic presence. Additionally, by expanding its ties with Iran, India could prove its role as a great power in the region, capable of securing its national interests not hindered by Western influence. India’s strategic and economic growth in the region will further solidify its status as a great power.

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