In a setback to Indian efforts to re-energise the relationship with Iran, a 35-year-old Indo-Iranian shipping joint venture, Iran-o-Hind, has been placed under sanctions in the latest UN Security Council Resolution 1929 on Iran. This is the only entity with Indian links included in the fresh round of sanctions.

Significantly, this has implications for transport of crude that India imports from Iran. Tankers from Iran-o-Hind, which has a fleet of eight vessels, were used for this purpose. Sources said India will now have to look for alternate ways to transport crude, engaging services of entities that have not been affected by the sanctions.

India imports 12% of its crude from Iran. Formed in 1975, Iran-o-Hind is a joint venture between the Islamic Republic of Iran Shipping Lines (IRISL), which holds 51% stake, and Shipping Corporation of India that has 49% stake. The entity has been placed under sanctions in Annex III of UNSCR 1929.

The resolution adds IRISL to the list of entities and specifically designates Iran-O-Hind as among the subsidiaries which now come under sanctions. This means that measures laid out in the original 2006 UN sanctions resolution 1747 on Iran will now be applicable to Iran-o-Hind. This would essentially require India to freeze all funding to this entity as well as its assets except those funds necessary to pay salaries and other such mandatory expenses.

While Iran-O-Hind tankers continue to operate for the moment, the shipping ministry is said to have asked for further directions from South Block. Given India?s position that it would abide by UN resolutions on Iran as well as its past record, sources said, there is very little New Delhi can do in this case and alternate ways of transporting crude would have to be found soon. In trying to cope with this gradual isolation, Iran placed significant premium on the Indo-Iran joint commission meeting which concluded on Friday.

At a meeting with shipping ministry officials, Iran officially handed over a proposal inviting Indian investment to build the strategically important Chabahar port. Conceived more than six years ago, this project was to link up with the Zaranj-Delaram road, already built by India, so that Afghanistan gets port connectivity. But matters have moved very slowly even as both New Delhi and Kabul are now trying to increase pressure on Tehran. This time, Iran has provided a proposal and also indicated that it would need Indian technical help with rail linkages for the port.

While this project is not affected, sources said, such sanctions will inhibit future cooperation in some measure or the other. So while India may have signed a fresh air services agreement with Iran on Friday, the fact is that no Indian carrier has plans to operate to Iran. Much of the benefit will go to Iran as it has been agreed to add two more ports of call besides increasing the number of flights.

It is believed that Iran even wanted to explore cooperation in space but that too had to be politely turned down. At the same time, New Delhi is of the view that much can be done within the limited scope possible and every opportunity ought to be explored.