India's task of navigating ripple effect from Iran protests

The recent wave of protests in Iran has emerged as one of the most serious challenges to the Islamic Republic’s theocratic leadership in years. While much of the international media coverage has focused on reactions from Washington and warnings issued by the Trump administration, the implications for Iran’s key partners have received far less attention. Among those most exposed is India, whose trade ties, energy security and strategic investments are likely to be directly affected by prolonged unrest in Iran.

New Delhi has traditionally maintained cordial relations with Tehran, anchored in trade, energy cooperation and infrastructure investment. However, the India–Iran relationship has long been complicated by tensions between Iran and the United States, a dynamic highlighted in an analysis by The Diplomat. US sanctions and geopolitical pressure have repeatedly forced India to recalibrate its engagement with Iran, often at high economic and strategic cost.

One of India’s most important stakes in Iran is the Chabahar port project, in which New Delhi has invested nearly $500 million. The port is seen as a strategic gateway that allows India access to Afghanistan, Central Asia, Russia and Europe while bypassing New Delhi's foe Pakistan.

In May 2024, India and Iran signed a 10-year agreement for the development of the Shahid Beheshti terminal at Chabahar, under which India Ports Global Ltd committed investments worth $370 million.

India’s engagement with Iran was sharply curtailed after the US withdrew from the Joint Comprehensive Plan of Action (JCPOA) in 2018. The reimposition of sanctions forced India to reduce imports from Iran, and by 2019 New Delhi ended Iranian oil purchases altogether. As a result, bilateral trade fell dramatically, standing at just $1.68 billion as of October 2025.

The current unrest in Iran has been driven by deep economic grievances, soaring inflation and political repression. What began as calls for reform quickly escalated into demands for the overthrow of the clerical establishment. This instability has further complicated India’s strategic calculus, particularly as US President Donald Trump has adopted an increasingly confrontational stance.

In a January social media post, Trump warned that “any country doing business with the Islamic Republic of Iran will pay a tariff of 25 percent on any and all business being done with the US” If implemented, such a move would raise effective US tariffs on Indian goods to as much as 75 percent, when combined with existing penalties linked to India’s trade with Russia.

At the same time, India’s six-month US operational waiver for Chabahar port activities is set to expire on April 26, 2026.

As the deadline approaches, India’s Ministry of External Affairs has said, “We remain engaged with the US side in working out the arrangement.” Any tightening of sanctions would come at a particularly sensitive moment, as New Delhi is seeking to negotiate a broader trade deal with Washington.

As the article points out, delays linked to sanctions and uncertainty have already slowed India’s work at Chabahar, creating potential openings for China to expand its influence in Iran and the wider region. Such a shift would undermine India’s strategic position and complicate its maritime security objectives in the Indian Ocean.

Beyond geopolitics, India faces serious energy security risks from prolonged instability in Iran. The Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, is a vital chokepoint through which nearly one-fifth of global oil trade flows. For India, the dependence is even greater: close to 40 percent of its crude oil imports and around half of its gas imports transit the strait. Sustained unrest or disruption could threaten supplies, drive up energy prices and put additional pressure on the rupee.

As the world’s fourth-largest economy and a leading voice of the Global South, India occupies a pivotal position in a multi-aligned global order. Its current approach—calling for dialogue and peaceful resolution—reflects caution, but also raises questions about whether New Delhi is fully leveraging its strategic weight. When core interests are at stake, the article forecasts that India may need to accept greater pressure and articulate clearer red lines.

Ultimately, the unrest in Iran underscores the limits of strategic ambivalence. India cannot afford to remain a passive observer in crises that directly affect its economic, energy and geopolitical interests.

The Diplomat publication believes that clear choices, sustained engagement and a firm articulation of national priorities will be essential if New Delhi is to safeguard its long-term position in the region.

By Nazrin Sadigova