India and Iran relations are of centuries old and throughout the whole history their relationship has gone through many ups and downs due to the changing, domestic, regional and global situation from time to time. The transformation from geopolitics to geo-economics in South Asia, through the Chinese Belt and Road initiative, rising Indian economy, and description of Iran as the “Golden Gateway to Central Asia” by Indian Prime Minister, on the other hand, provided new opportunities to both the countries for strengthening their relations as both are looking to play a dominant role at the regional and global level. But the US withdrawal from the nuclear deal brought a new challenge before the two countries. Therefore the objective of this article is to analysis the main factors in India and Iran relation and the future course of action for overcoming the new challenges posed by the imposition of sanctions on Iran.