India reaffirmed on Saturday its willingness to develop Iran’s Port of Chabahar during the seventeenth meeting of the India-Iran Joint Commission in Tehran. With an initial investment pledge of some $100 million, the move further strengthens the emerging partnership between the two countries in Afghanistan.

The Chabahar port is critical to India’s Afghanistan policy. In the absence of direct physical access to the country and a hostile Pakistan denying Indian goods transit, the Iranian harbor is the most viable access point India has to Afghanistan and the rest of Central Asia.

India has already signed agreements with Afghanistan and Iran that grants preferential treatment and tariff reductions to Indian goods bound for Afghanistan and Central Asia at Chabahar. It has helped build the Delaram–Zaranj Highway, which connects Iran to the main Kandahar-Herat Highway in Afghanistan, as well as a road from Chabahar to the Iranian border.

Given Iran’s vital role in providing access to Afghanistan for Indian businesses, the government in New Delhi has resisted American pressure for the country to join international sanctions against the Islamic republic, designed to dissuade it from developing a nuclear weapons capability.

Before the overthrow of the Taliban in 2001, India and Iran both supported the Northern Alliance, a group of mostly minority ethnicities that opposed the Islamist Pashtun regime.

The two neighboring powers’ interests in Afghanistan still converge. A spillover in violence could have negative repercussions for both, including refugee flows, a particular concern for neighboring Iran, increased narcotics smuggling and terrorist attacks, which mainly concern India.

A return of the Taliban or some other radical Islamist group taking control of the country would serve neither India nor Iran. In such a case, the former would fear that the country once again becomes a safe haven for Muslim extremists who will be more susceptible to Pakistani interests.

From Tehran’s point of view, a Sunni bloc comprising Afghanistan, Pakistan and Saudi Arabia poses an ideological as well as security challenge. India’s and Iran’s engagement in Afghanistan has, for the past decades, been aimed at reducing the Pakistani, Saudi and, in Iran’s case, American influence in the region.

Finally, for Iran, cooperation with India in Afghanistan serves a symbolic and economic purpose as it allows the country to appear less isolated in the world and ease some of the pressure that international sanctions have brought.

Iran’s standoff with neighboring and Western nations does pose a problem for India which has to balance its relations with Iran against its interest in deepening relations with the United States. Collaborating with American initiatives in Afghanistan or Central Asia that exclude Iran might persuade the latter to sever ties, for instance by removing the preferential treatment given to India at Chabahar.

Linked to the standoff is Iran’s response to the American troop presence in Afghanistan. While it does not want to see the Taliban return to power, it has extended support to the group in an attempt to keep the United States preoccupied in Afghanistan and distract it from attacking Iran. It is likely to reduce this support once the United States and its allies withdraw from Afghanistan in 2014. For now, though, it threatens to strike at the very foundation of what brought India and Iran together in Afghanistan.

Moreover, this Iranian sabotage, along with its treatment of Afghan refugees and its tendency to fuel sectarian or ethnic rivalries in Afghanistan, is damaging its reputation in Afghanistan. It is increasingly seen in the same light as Pakistan. India, then, may want to be more cautious in being seen as a willing “partner” of Iran’s.

Pakistan’s possible response to such collusion cannot be ignored. The Northern Alliance was, and possibly still is, viewed in Islamabad as an Indo-Iranian attempt to thwart its influence in the country. The memory of such collaboration is likely to play a part in Pakistan’s strategic calculations, especially as increasing Indian and Iranian influence in Afghanistan, at Pakistan’s expense, could stoke its fears of strategic encirclement. Indian projects and targets have been attacked in the past and such attacks could extend to Iranian interests as well.

How the administrations in New Delhi and Tehran manage to navigate around these roadblocks over time will determine the viability and durability of their alliance in Afghanistan.

This is a revised version of an article that originally appeared at the The Institute of Peace and Conflict Studies, August 22, 2012.