Modi’s Iran policy is ‘strategic surrender’

Long before diplomacy had a name, India and Iran were already in conversation. The Indus Valley traded lapis lazuli and ivory with ancient Persia. Sanskrit and Avestan share a common ancestor. Indian courts, land records, music and the Hindi language still carry Persian fingerprints.

Which is why the Modi government’s abrupt desertion of Iran is not just a foreign policy failure; it is a civilisational betrayal — unconsidered, unannounced and unexplained to either Tehran or the Indian people.

India and Iran have had their differences, but never before were relations reset so abruptly and surreptitiously, abandoning diplomatic channels.

India’s independence in 1947 created a structural divide. Iran, which was an immediate neighbour, no longer shared a border with India; Pakistan separated the two countries.

The Shah’s Iran was firmly in the Western camp, while Nehru’s India was non-aligned. When India sided with Iraq in the Iran–Iraq War, bilateral ties frayed further. Paradoxically, it was Khomeini’s Islamic Revolution of 1979 that reopened the door. Both countries were now outside America’s strategic embrace and both had reasons to watch Pakistan’s growing regional ambitions with alarm.

Afghanistan played a hand in the renewal of India-Iran ties. As the Taliban consolidated power in Afghanistan between 1996 and 2001, India and Iran found themselves ranged on the same side of the battle. Pakistan’s military intelligence agency ISI was the Taliban’s principal backer.

India and Iran, alongside Russia, provided political support, financing and arms to the Northern Alliance. This was not a partnership featuring the diplomatic confetti of joint communiqués; it rested on the hard solidarity of common enemies and shared interests.

In 1994, against the backdrop of the demolition of Babri Masjid in 1992, Pakistan tried to mobilise the Organisation of Islamic Cooperation (OIC) against India at the UN Human Rights Commission. Iran blocked the OIC consensus — an Islamic republic chose India over Pakistan. Tehran has shielded New Delhi at the OIC ever since.

Chabahar, CPEC and a strategic counter

Turmoil in Afghanistan gave India what the Partition had taken away — a route to Central Asia bypassing Pakistan.

In 2015, China embedded itself permanently on India’s western flank with the China-Pakistan Economic Corridor (CPEC). It planned Pakistan’s Gwadar port as its maritime anchor and designed the Belt and Road Initiative (BRI) to build a China-centric economic architecture across Asia, locking in dependencies that would outlast governments.

India’s answer was Chabahar, which gives India direct access to Afghanistan without crossing a single mile of Pakistani territory. More significantly, Chabahar is the entry point to a 7,200 km multi-modal network, the International North-South Transport Corridor (INSTC) connecting Mumbai to Moscow via Tehran and Baku.

India, Iran and Russia signed the INSTC agreement in 2000. Fully operationalised, this corridor would reduce cargo transit time from 40 days to 20 and cut transport costs by 30 per cent, providing India an arterial trade route to Central Asia, Russia and Europe, bypassing Pakistan and China’s preferred chokepoints.

Chabahar is more than just a port — it’s a critical element of India’s foreign policy architecture to physically counter China’s CPEC and BRI; it’s a way for India to assert that it won’t be landlocked by the China-Pakistan axis. Remove Chabahar from India’s strategic inventory and India loses its western connectivity flank to Beijing and Islamabad forever; there is no substitute.

That’s why successive governments supported the Chabahar project. The Manmohan Singh government committed $100 million to its development after his visit to Tehran in 2012. Modi too visited Tehran in 2016 and signed the Shahid Beheshti Terminal agreement. India took operational control of the terminal in May 2024. Modi claimed it as a landmark achievement — and it was.

A masterclass in ‘strategic autonomy’…

When the US and EU imposed sweeping sanctions on Iran in 2011–12, cutting Iranian banks from the global dollar system, Dr Manmohan Singh demonstrated what a sovereign foreign policy looks like. He declared publicly in a press conference that India would continue importing Iranian oil despite sanctions and then announced a trade delegation to Tehran.

In March 2012, Iranian banks were disconnected from the SWIFT financial messaging network, the global system for international banking transactions. Dr Singh challenged it by devising the ‘rupee–rial payment mechanism’ through UCO Bank, routing oil settlements entirely outside the dollar system and beyond Washington’s reach. The surplus accrued was used to clear billions in arrears owed to Indian exporters. That financial architecture was later adapted when India needed to trade with Russia after 2022.

Manmohan Singh’s Iran policy built the infrastructure of India’s sanctions-resistant trade system. At the peak of Western pressure, he sent then vice-president Hamid Ansari, a former ambassador to Tehran, to attend President Rouhani’s inauguration in August 2013. The message that India had not abandoned Iran needed no explicit words. That is what strategic autonomy looks like.

…and Modi’s abject surrender

In 2019, bowing to Trump’s pressure, India halted all crude imports from Iran, which had been India’s second-largest oil supplier, at 16.5 per cent of its basket. Iranian oil came with freight discounts, favourable payment terms and non-dollar settlement; abandoning it cost India billions. Yet Chabahar remained on track and the friendship continued. Iran participated in India’s Milan 2026 naval exercises at Visakhapatnam as recently as 25 February.

Everything changed when Prime Minister Modi visited Israel on 26 February. Two days later, when the US-Israel war on Iran began, India made a visible shift. It did not condemn the violation of Iranian sovereignty. It did not condole the assassination of Iran’s Supreme Leader.

When the Iranian frigate IRIS Dena was torpedoed by a US submarine in Sri Lanka’s waters as it was returning from the Milan 2026 exercises, India’s response focused on ‘humanitarian search-and-rescue’. A guest in India had taken a hit at India’s doorstep, but India looked away.

Under US pressure, the Modi government dropped funding for Chabahar to zero in the Union Budget 2026–27. India’s bilateral trade with Iran has collapsed to $1.68 billion. Its infrastructure investment in Chabahar is now at risk of becoming a stranded asset, which may be transferred to Chinese or Russian operators. The port India built to counter China may end up being operated by China.

Modi’s abrupt capitulation means India loses its only independent overland gateway to Afghanistan and Central Asia. The entire INSTC connectivity arc from the Arabian Sea to the Caspian is a casualty.

The US has publicly suggested that India requires its permission to buy Russian oil. This is not the foreign policy of a rising power; it is the foreign policy of a client state.

If India abandons Iran, it will lose the only geographical, infrastructural and strategic counter to China’s Belt and Road. That would be a strategic self-goal and history will record it as such.

Gurdeep Singh Sappal is a Permanent Invitee to the Congress Working Committee