New Delhi: Prime Minister Narendra Modi began a two-day visit to Iran on Sunday, the first bilateral visit by an Indian prime minister in 15 years. Monday is the operative day of his visit—while meetings are slated with supreme leader of Iran Ayatollah Ali Khamenei and Iranian president Hassan Rouhani, many agreements are expected to be signed between the two sides.

Modi’s visit to Iran comes after his visits to the United Arab Emirates (UAE) and Saudi Arabia and ahead of trips to Qatar and Israel. It also comes at a time of great flux in the region. Iran, freed of sanctions for its clandestine nuclear programme, is looking for investments to build up its economy. Many countries that had shunned it in the past, like those from the West and countries like India that were unable to build linkages due to the sanctions, are now looking for trade and economic opportunities in Iran.

The potential rise of Shia-majority Iran has upset many countries in the region—Sunni-majority Saudi Arabia for one and Israel for another, with media reports speaking of an unstated “alliance" between the two. Earlier this year, Saudi Arabia executed a Shia cleric and the incident resulted in a spike in tension with Iran with crowds ransacking the Saudi embassy in Tehran. This led to Saudi Arabia cutting off diplomatic links with Iran, with Bahrain and Sudan following suit. The UAE downgraded ties with Iran.

For India, which has been renewing its links with Saudi Arabia and the UAE, Iran is a crucial source of energy near home and is also key as a gateway to landlocked Afghanistan given India’s tension with Pakistan. India, Iran and Russia were the key backers of the erstwhile anti-Taliban Northern Alliance when the hardline group was in control of Kabul from 1996-2001 before being ousted by US-led forces. The Taliban has now regrouped and is mounting a serious challenge to the Ashraf Ghani government in Kabul.

Here are five things to watch out for on Day two of Modi’s visit to Iran.

1. Pact to develop Chabahar port: Proposed in 2003, there was hardly any movement on the project, given international sanctions on Iran. During Modi’s visit, India, Iran and Afghanistan are set to sign a pact on development and operation of phase I of Chabahar port. This involves development of two terminals and five berths which have multi-cargo capacity. India is to put down an investment of more than $200 million out of which India’s EXIM Bank is extending a credit line of $150 million.

2. Pact on connectivity: Possible pact on connectivity between Iran, Afghanistan and India through the Chabahar-Zahedan (in Iran)-Zaranj (in south-west Afghanistan) corridor which will help India access landlocked Afghanistan and Central Asia.

3. Gas field project: A boost for New Delhi’s proposal for allowing ONGC Videsh Ltd (OVL) to develop the Farzad B gas field in Iran. OVL, along with Oil India Ltd and Indian Oil Corp. Ltd, had earlier invested about $100 million in the Farzad B gas field, but production could not be started as Indian companies found it difficult to stay engaged in the hydrocarbon sector due to sanctions imposed by the US and the European Union.

4. Oil supplies: India and Iran are also expected to discuss a proposal by India to increase its oil supplies from Iran. India had to reduce imports from Iran due to sanctions on financial institutions dealing with Iran’s oil industry which prevented payments being made for fuel bills. Ways to diversify trade and include more items into the trade basket could be another point of discussion.

5. Discussion on situation in Afghanistan: With the Taliban regrouping, India and Iran and expected to exchange notes on the situation in the insurgency-torn country. Talks between the Taliban and the Afghan government seemed uncertain till last week and the uncertainty over peace talks could linger with the Taliban confirming the death of their leader Mullah Akhtar Mansour in a drone strike in Pakistan. Both India and Iran have reason to be wary of the rise of the Taliban with both countries fearing the impact of Sunni-backed extremist forces on their countries.

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