New Delhi: With the United States tightening the economic screws on Tehran and resuming strikes on Iran after a month-long lull, Prime Minister Narendra Modi on Monday (August 31) called for expanding and diversifying trade with Iran as he met President Masoud Pezeshkian on the sidelines of the Shanghai Cooperation Organisation summit in Bishkek.Monday’s meeting in the Kyrgyz capital was the first face-to-face encounter between the two leaders since the war began on February 28, and it followed three phone conversations between them over the six months of the conflict.It came after the United States carried out its first strikes on Iran in more than a month, targeting Iranian rocket launchers on Larak Island in the Strait of Hormuz. Iran subsequently fired ballistic missiles at US positions in Jordan, while the United Arab Emirates said it had intercepted an Iranian drone over its territorial waters on Monday.In a post on X, Modi said he had reiterated India’s commitment to strengthening its “long standing friendship” with Iran and expressed an interest in expanding and diversifying bilateral trade.“We want to expand and diversify our trade basket in the times to come,” Modi wrote.The call to expand trade comes at a time when India-Iran commerce has contracted dramatically under the impact of US sanctions and the disruption caused by the war. Bilateral trade stood at just $1.63 billion in 2025-26, down from $17.03 billion in 2018-19. The sharp decline reflects India’s halt in imports of Iranian crude after the US ended waivers for oil purchases in 2019.Last week, the Trump administration launched “Operation Economic Outcast” against Iran, expanding sanctions and warning countries and companies that continue doing business with Tehran that they could face measures affecting their access to the US financial system. Washington has also threatened to set timelines for other governments to wind down economic activity with Iran.Speaking to reporters, Foreign Secretary Vikram Misri said the trade currently taking place between India and Iran was “essentially conducted between private parties”, which had to “navigate the international trading and financial environment”.Indian and Iranian businesses, he said, had to take into account finance, insurance, transport and logistics, but added that “within the domain of whatever is feasible”, they could explore possibilities beyond their existing trade.Misri stated the government had taken note of new US sanctions against Iran and was examining their implications. While India recognises UN sanctions, he said, New Delhi’s role was to make Indian entities that could potentially be affected aware of the US measures and their possible consequences. Ultimately, he added, it would be for the businesses concerned to decide whether to continue their activities.Pezeshkian, according to the Iranian readout of the meeting, also emphasised the scope for expanding economic ties.He said by strengthening bilateral cooperation and “neutralising the effects of sanctions”, the two countries could further elevate ties. Pezeshkian also pointed to efforts by the US and Israel to restrict Iran’s relations with other countries, but said Tehran was ready to expand cooperation with India in different fields.The difficulties surrounding Chabahar, however, illustrate the constraints on that ambition.India has long viewed the Iranian port on the Gulf of Oman as a strategic gateway to Afghanistan and Central Asia, allowing it to bypass Pakistan and potentially serving as a key node in the International North-South Transport Corridor linking India with Iran, Russia, Central Asia and Europe.In May 2024, India Ports Global Limited (IPGL) signed a 10-year contract with Iran to equip and operate the Shahid Beheshti terminal at Chabahar, with India committing $120 million towards port equipment.But India’s involvement has since come under renewed US sanctions pressure. The US revoked the sanctions exception that had protected India’s Chabahar activities in September 2025. Following Indian representations, Washington subsequently extended conditional exemption until April 26, 2026.India has said it has fully discharged its $120 million financial commitment under the 2024 contract and has no further financial obligation towards the project. But the winding down of its operational exposure has been visible. Government-nominated directors on the IPGL board resigned and the company’s website was taken offline as New Delhi sought to limit the exposure of Indian entities and officials to sanctions.The Union Budget for 2026-27 also made no allocation for Chabahar, after the project had received a revised allocation of Rs 400 crore in 2025-26.After the waiver expired on April 26, the Indian government said the status of Chabahar remained under discussion with both Iran and the US.Misri said the conflict in West Asia had had an “attendant impact” on cooperation between countries in the region, including on the “regime” applicable to activities at Chabahar.“This is something on which we remain in discussion and in touch with various stakeholders in order to find a sustainable way forward to continue this element of cooperation,” he said, adding that the port had a role in the region and could benefit a range of countries.Significantly, Pezeshkian’s account of the talks specifically mentioned Chabahar. The Iranian readout said the two sides discussed transport and maritime cooperation, developments related to the Strait of Hormuz and “the process of cooperation in Chabahar port”.Neither Modi’s post on the meeting nor the Indian government’s detailed readout, however, mentioned Chabahar by name.Concerns over renewed military actionThe discussion on economic ties took place alongside the more immediate concern of renewed military action and its impact on shipping, an issue that has acquired a direct human dimension for India.Modi said the two leaders had discussed the “prevailing situation in the region” and that India would continue to support “all efforts aimed at ensuring lasting peace”.The Indian government said Modi expressed concern over the escalation of tensions and reiterated India’s consistent position that all issues must be resolved through “dialogue and diplomacy”.He also stressed the need for continued efforts to ensure lasting peace and stability and called for the safeguarding of “freedom of navigation and commerce”. Civilians and civilian infrastructure, including commercial shipping and seafarers, must not be harmed “under any circumstances”, he said.The emphasis on commercial shipping and seafarers is politically for India, which has already lost at least 13 citizens in attacks on merchant vessels during the conflict.Incidentally, New Delhi has summoned both the Iranian and the American missions this year over attacks on commercial vessels carrying Indian crew,The International Maritime Organisation said on August 28 that at least 70 attacks on international shipping had been verified since the conflict began and that 19 seafarers had been killed.India has also tightened maritime precautions. The Directorate General of Shipping has advised shipowners, managers and recruitment agencies to avoid deploying Indian seafarers on vessels undertaking voyages through the Strait of Hormuz until further orders.The Iranian readout said Pezeshkian thanked India for its cooperation with Iran during the recent war and stressed the need for stronger diplomatic efforts to establish peace and security in the region.Pezeshkian said Iran had sought peace and the resolution of regional problems through dialogue since the beginning of his government, but accused the United States of choosing war, insecurity and the imposition of its will through force instead of diplomatic mechanisms.He said Iran did not welcome war but had a responsibility to protect its people from danger and insecurity. Tehran, he added, remained committed to agreements it had accepted and hoped the other side would fulfil its obligations, arguing that continuation of the war was in the interests of neither Iran, the region nor humanity.Pezeshkian also asked Modi to use India’s relations with different countries to help persuade them to move away from “war and bloodshed” towards dialogue and agreement.Modi, according to the Iranian readout, agreed that some actors saw their interests in the continuation of war and said efforts towards peace should therefore be intensified. “I agree with you that there are those who see their interests in war, but we must intensify our efforts to establish peace. My belief and conviction is that, ultimately, peace and security will prevail,” Modi was quoted as stating. However, there was no verified about Modi’s remarks from the Indian side.He reportedly described Pezeshkian as a “peace-loving” leader and said he believed the Iranian president could play an effective role in advancing peace.Modi conveyed that he looked forward to welcoming Pezeshkian to India for the upcoming BRICS summit.Pezeshkian has previously sought a more active role for BRICS in responding to the Iran war. During earlier conversations with Modi, he had urged the grouping to play an independent role in halting attacks on Iran and safeguarding regional peace.India has acknowledged the difficulty of securing a common BRICS position on the conflict because several members have been directly involved in it. Iran and the UAE, both BRICS members, have found themselves on opposing sides of the regional confrontation.At the BRICS foreign ministers’ meeting in New Delhi in May, disagreements between Iran and the UAE over the war prevented the adoption of a joint declaration, with India instead issuing a chair’s statement.On the prospects of an outcome document at the upcoming summit, Misri said India was aware of the different views held by BRICS members and that its leaders, ministers and senior officials were in touch with their counterparts.“We will remain so till the time the summit is concluded,” he said, adding that India hoped to arrive at “a very constructive outcome” benefiting all BRICS members.