Context: Iran has completely withdrawn from JCPOA (Joint Comprehensive Plan of Action) nuclear deal. The announcement came after the US troops killed General Qassem Soleimani.

What was the iran nuclear deal?

Iran agreed to rein in its nuclear programme in a 2015 deal struck with the US, UK, Russia, China, France and Germany.

• Under the Joint Comprehensive Plan of Action (JCPoA)Tehran agreed to significantly cut its stores of centrifuges, enriched uranium and heavy-water, all key components for nuclear weapons.
• The JCPOA established the Joint Commission,with the negotiating parties all represented, to monitor implementation of the agreement.

Why did Iran agree to the deal?

It had been hit with devastating economic sanctions by the United Nations, United States and the European Union that are estimated to have cost it tens of billions of pounds a year in lost oil export revenues. Billions in overseas assets had also been frozen.

Why has US pulled out of the deal?

Trump and opponents to the deal say it is flawed because it gives Iran access to billions of dollars but does not address Iran’s support for groups the U.S. considers terrorists, like Hamas and Hezbollah. They note it also doesn’t curb Iran’s development of ballistic missiles and that the deal phases out by 2030. They say Iran has lied about its nuclear program in the past.

Implications for India:

On Oil and Gas: The impact on world oil prices will be the immediately visible impact. Iran is presently India’s third biggest supplier (after Iraq and Saudi Arabia), and any increase in prices will hit both inflation levels as well as the Indian rupee.

It would impact the development of Chahbahar port.

INSTC: It will also affect these plans, especially if any of the countries along the route or banking and insurance companies dealing with the INSTC plan also decide to adhere to U.S. restrictions on trade with Iran.

Shanghai Cooperation Organisation: China may consider inducting Iran into the SCO. If the proposal is accepted by the SCO, which is led by China and Russia, India will become a member of a bloc that will be seen as anti-American, and will run counter to some of the government’s other initiatives like the Indo-Pacific quadrilateral with the U.S., Australia and Japan.

Global Implications: