Modi Govt Walks Fine Line between Iran and US
India's Prime Minister Narendra Modi is increasing interactions with Iran as escalating conflict in the Middle East leads to significant gas shortages in the nation and endangers economic growth, challenging New Delhi's relationship with the US.
Modi's administration announced that it achieved the safe passage of two tankers transporting liquefied petroleum gas via the Strait of Hormuz, which has been nearly shut for two weeks following airstrikes by the US and Israel targeting Iran. India is one of only a few countries, alongside China and Russia, that has had vessels navigate through the strait safely since the conflict started.
Despite originally being quiet on the attacks on Iran, India is now ramping up its diplomatic efforts as the conflict escalates and concerns ripple through energy and financial markets. India ranks as the world's second-largest importer of LPG and is experiencing severe shortages of the fuel, which is essential for cooking gas and industrial applications.
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India imports nearly 90 percent of its oil, meaning crude prices exceeding $100 will increase inflation and strain the currency, which is already at all-time lows.
Concurrently, New Delhi is working to handle its ties with the US, a key strategic and economic ally. Earlier this month, the US permitted India to resume buying Russian oil, undoing its position from last year when the Trump administration imposed tariffs to compel New Delhi to stop the acquisitions. The US is India's largest export destination, and both parties are discussing a trade agreement to reduce tariffs.
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Nitin Pai, founder of Takshashila Institution, a think tank based in Bengaluru says, “India has been trying to balance its ties both with the US and Iran. Passage of ships from Hormuz indicates that the diplomacy is working.”
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“Modi’s call with Iranian President Masoud Pezeshkian last week was “damage control” and shows New Delhi is trying to “hedge” its position having earlier faced criticism for appearing to side with the US and Israel," says Nitin.