Context: Analyzing the costs of neglecting the new possibilities for wide-ranging Arabian business are far higher than a lost railway contract in Iran for India.
India’s extra-special relationship with Iran: It rests on a number of claims:

• Historical connections
• Civilizational bonds
• Energy supplies
• Regional security.

With Arabian Peninsula

• All above factors are of far greater import in India’s engagement.

Outweighing relationship with Iran

• Millions of Indian immigrants in the Arab nations
• Massive hard currency remittances from them
• The density of commercial engagement with the Arab Gulf.
• In recent years, the UAE and Saudi Arabia have extended invaluable support in countering terrorism and blocked attempts to condemn India in the Muslim world

Curious inversion in India’s intellectual imagination

• Latest anxiety: Delhi lost a railway contract in Iran.
• Large countries with major foreign investments and projects win some and lose some. That is part of doing business in other countries. Then there is no escaping the political risk associated with foreign projects.

Implication of Dealing of India with Iran
Sanctions imposed by the US have crippled the Iranian economy:

• It also targets third countries that do business with certain Iranian entities.
• India gained exemption from sanctions: For its participation in the Chabahar port project in Iran but they don’t apply to some of the partners suggested by Iran in the railway project.
• Iran would like India to break the US sanctions regime: A prudent Delhi is resisting that temptation and would rather lose the railway contract than get into the raging crossfire between the US and Iran.

India’s Iran policy as a continuous purity test for Delhi’s “strategic autonomy”:

• Some foreign policy experts expect Delhi to conduct its relationship with Iran without a reference to either a cost-benefit calculus or Iran’s troubled relationship with others with whom India has important partnerships.

On Iran’s covert nuclear programme:

• As the US mounted pressure on Iran to come clean 15 years ago, there was a strong view in Delhi that India should cast its lot with Tehran.
• View of pragmatics: They pointed to one of the preconditions for the India-US nuclear deal — Delhi’s strong commitment to prevent the proliferation of nuclear weapons.
• Confrontation of backing Iran in its nuclear confrontation with NPT: It would mean killing support in the US Congress for the historic civil nuclear initiative signed by India in July 2005.
• Delhi’s voted against Iran in the IAEA: The pragmatists were vindicated when Iran concluded a nuclear deal of its own with the US and major powers a decade later.

Importance of Iran for India’s foreign policy
Iran is one of the the most important nations of the world based on:

• Geographic and demographic size
• The geopolitical location next door
• Natural resources
• The extraordinary talents of its people

Most of those fabulous assets have been, unfortunately, neutralized by Iran’s prolonged confrontation with the US.

• For both internal and external reasons, Iran will remain a difficult place to do business. Delhi must advance ties with it within the confines of that unfortunate but real constraint.

Opportunity for India in Arab

• The Arab world has had its doors open for political, economic and technological cooperation with India.
• Three moderate Arab nations — Egypt, Saudi Arabia and the UAE — are confronting radical forces in the region and are valuable partners for India in countering forces of destabilization.
• Scale of Beijing’s economic advances in the Arab world: The talk of a spectacular deal between China and Iran is just talk for now but there is real Chinese economic action in the Arab world as the region embraces China’s Belt and Road Initiative. China’s Digital Silk Road too is gaining ground in the Arab world.
• India is no minor economic force in the Arab world: It is having had a much longer engagement with the region than China. Instead of defining an unrealistic competition with Beijing, Delhi must up its own commercial game in the Arab world. One of the new possibilities for India lies in the domain of new technologies.

Road Ahead

• The UAE launched the first home-grown Arab space mission from a Japanese rocket. The UAE’s space programme is only a reflection of the emerging sentiment among the Gulf Arabs to reduce the over-dependence on oil, promote alternative energy sources, invest in higher education, and develop technology hubs.
• This provides a solid basis for elevating India’s economic partnership with the Arab world to the next level.