US secretary of state Hillary Clinton’s visit has made India’s diplomatic community work overtime. The former first lady has reiterated America’s stand over India’s oil imports from Iran. The US wants India to minimise oil imports from the Middle-Eastern country as its beef over Iran’s nuclear programme gets worse.

New Delhi on the other hand has cleverly manipulated the situation forcing Clinton to concede that India needs Iranian oil to meet its energy demands. In return for softening its stand on Iran, America has been offered the chance to invest more in the retail sector in India.

But is oil the only thing that India needs from Iran? It does not seem so. China has been clandestinely developing the Gwadar port in Pakistan with the aim of encircling India in the case of a conflict. Pakistan’s economic inadequacies have forced it to become nothing but a pawn in the hands of the Chinese as they aim to extend their domination over Asia.

India on its part is using the Look East policy as a tool to find potential allies to counter a rising China and a belligerent Pakistan. India is already investing and developing Iran’s Chah Bahar port which would give it access to Afghanistan and many other central Asian countries. Chah Bahar is strategic as majority of people who live in the area are Baloch and share the same ethnicity with Pakistani Balochis (who are engaged in a conflict with the government).  

Iran and India have enjoyed a somewhat knotty but amicable relationship. During the Cold War, non-aligned India decided to go with the Soviet Union while Iran backed the US. India’s close proximity to Iraq during the Iran-Iraq war only festered ill will among Iranians who actively supported India’s archrival Pakistan.

The one point that India and Iran share is the Taliban. Both the nations had vigorously opposed the erstwhile Taliban rule in Afghanistan. While India supported the presence of Nato troops, Iran stopped short of endorsing the western war effort.

Iran too frequently objected to Pakistan's attempts to draft anti-India resolutions at international organizations such as the Organisation of Islamic Conference (OIC) and the Human Rights Commission. India reciprocally welcomed Iran's inclusion as an observer state in the SAARC regional organization.

According to an article in the Foreign Policy journal, India is the recipient of 4,25,000 barrels of oil per day (almost 16% of its crude oil), and consequently is one of the largest foreign investors in Iran's oil and gas industry. India also has two major ongoing projects in Iran — the $5.5 billion offshore block discovered by Indian companies and a $10 billion agreement to develop parts of the South Pars gas field in Iran. India is also helping Iran build a highway between Zaranj and Delaram.

Recently, India voted against Iran at the International Atomic Energy Agency, a vote which many including Bush administration official Stephen Geoffrey Rademaker said was coerced. Many Indian strategic experts feel that Iran’s nuclear programme is not a threat to India and the vote against Iran has hurt India’s prospects of stable business in the Middle East.

India and Iran are also working out ways to trade with American sanctions creating big problems. India had been using the Asian Clearing Union (ACU) to pay its outstanding dues to Iran but was stopped by the Americans. Iran has now agreed to accept payments in Indian rupee which it plans to funnel back into India to buy Indian goods.

With China getting closer to Pakistan, India must now try to get Iran on its side. Despite American sanctions and pressure on Iran, India must find a way to trade with and support Iran as it could potentially be India’s trump card in the Middle East.