India’s decision to buy more crude oil from Iran is unlikely to please the United States. It is a different matter that the sanctions imposed on Iran allow it to sell a part of its production. Realism dictates India to turn increasingly to Tehran as it faces a major current account deficit problem on account of the burgeoning oil import bill. Dollar-priced oil has become unaffordable in view of the depreciation in the value of the rupee vis-a-vis the dollar. One major attraction of Iranian oil is that it can be paid for in rupee. In other words, it makes good economic sense to buy as much Iranian oil as possible.
Good economic and political relations with Iran are in conformity with India’s strategic interests. The two nations have maintained good relations for long. Sanctions-hit Iran can turn to India to meet most of its import needs, which will also help India to maintain the balance of payments position, tilted heavily in favour of Tehran. India has even offered facilities of routing imports from other countries through India. There is no denying that Iran faces hardship, starved as it is of foreign exchange, despite vast oil resources. Of course, all this does not mean that India approves of its alleged plan to make nuclear bombs. Yet, it needs to be said that good diplomacy is all about securing national interests with the least compromises.
Iran provides India the only corridor to channel goods meant for Afghanistan. India has been engaged in a massive programme aimed at strengthening infrastructure and development in the landlocked nation. With the US set to withdraw its forces from Afghanistan by the end of 2014, India wants to improve its engagement with Kabul. Pakistan does not like India playing any role in Afghanistan in the mistaken belief that it is its vassal. Iran, too, does not want Pakistan’s interference in Afghanistan with its dangerous implications for the whole region. It is, therefore, in the interest of both nations that there should be better political and economic relations.