India is all set to host Iranian President Hassan Rouhani later this week reasserting the growing ties between the twocountries that is expected to strengthen New Delhi’s relationship with the larger Arab world.

Rouhani, who will be embarking on his maiden visit to India since coming to power in August 2013, is visiting at a time when the US, under President Donald Trump, has kept Iran on tenterhooks with repeated threats of trade sanctions as well as threats to pull out of the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement.

In May last year, when Rouhani secured a landslide victory for the second time, India saw it as an ushering in of a democratic and moderate era. New Delhi has been looking at Tehran for emboldening its connectivity plans with Western Asia and also secure its energy needs.

Chabahar port agreement

During Prime Minister Narendra Modi’s visit to Iran in May 2016, both sides had signed a $500-million agreement to develop the Chabahar port to boost regional connectivity and encourage more maritime links and services between the two countries, bypassing Pakistan that continues to place hurdles for India in doing trade with Afghanistan, Iran and beyond. The agreement also included funding of a rail link to Zahedan.

Modi’s visit to Iran had marked the first visit by an Indian Prime Minister in the past 15 years.

India, Iran and Afghanistan are also part of the Trilateral Agreement on Establishment of International Transport and Transit Corridor at Chabahar. India has massive plans to set up manufacturing plants in segments such as fertilisers, petrochemicals and metallurgy in the Chabahar Free Trade-Industrial Zone.

India has plans not just to develop the Chabahar port, but also develop links with Central Asia, making Iran the hub through the development of the International North-South Transport Corridor (INSTC), a multi-modal network that will connect western Indian ports with Europe via Iran, according to sources.

Infrastructure investments

Although the threat of another round of trade sanctions by the US on Iran looms large, India has decided it will not “shy away” from investing in large infrastructure projects of Iran as it wants to isolate Pakistan in all its connectivity plans. The massive connectivity plans that India has envisaged with Iran can well be New Delhi’s response to Beijing’s One-Belt-One-Road (OBOR) initiative, sources said.

Besides, Iran continues to be India’s third-largest oil supplier. India bought 12.5 MT of oil from Iran during April-October in 2017-18. Oil imports from Iran, which plummeted during 2007-2015 on account of the western sanctions, are now steadily rising.

During President Rouhani’s visit, both sides might come to an amicable solution on the ongoing row regarding Farzad B gas fields, which has become a sore point in the bilateral ties between New Delhi and Tehran.

When Modi had visited Iran, it was decided that a Heads of Agreement will be concluded by the end of 2016 that will push for the signing of the multi-billion dollar commercial contract for Farzad B. However, both sides are now engaged in a blame-game of sorts, while the contract is far from being negotiated.

Rouhani and Modi may also discuss about the Indian Prime Minister’s maiden visit to Palestine within months of US’ move to recognise Jerusalem as the capital of Israel.