We applied (Canadian and Italian) for our Indian visa in Tehran and it was a drawn out painful process. During our multiple visits to the Indian embassy we met numerous other people travelling with mostly the same experience so we thought it would be helpful to share here for those considering.

This is how went for us

October 30th - we delivered the documents (copy passport, copy of iranian visa and entry stamp, 2 pictures, form that they will give you in the embassy, letter of introduction from your embassy, printed form you fill online at this address indianvisaonline.gov.in/visa/ , air plane ticket or if you are travelling overland the itinerary of your journey and details like plate number and CDP number).
After delivering the documents the not really polite girl at the desk (who you will barely see thanks to the reflective glass) will tell you to come back after 5-7 days. All your documents apparently has to be sent in the indian embassy of your country by fax.
We had to pay 40.000 rials per person.

November 7th - we came back to see if our documents were ready and we were told that there have been no response from our embassies and we were told to phone the indian embaxsy in our countries.
The same day we called and were told that nothing had been recieved until that day.

November 8th - Back to the embassy and after putting some pressure and not being so polite we were given the documents and told to proceed with the step 2 in the VFA office (20 minutes walking from the embassy).
Once in the VFA office we were able to pay 584.000 rials each and had the receipt given to us and were told to pick up the passports with visa after 7 days (Nov 15th). At this point you have to give your passport to them.

We tryed to have it earlier cause our iranian visa was about to expire. We went back after 3 days and then each day asking if it was ready. They kept saying maybe tomorrow and to come back, and in the end we recieved our passports back after 6 days (Nov 14), and then we only got it that day after waiting 5 hours and asking ++times, trying to explain our situation.

We also met a couple where it took a month. Would recommend phoning your Indian embassy in your home country after 2 or 3 days to see if they actually received your documents.
Make sure to fill the form online completely... may seem silly but even if your father does not have a previous nationaly you have to fill in the box with his only nationality! The same for the "visible identification marks" don't put "none" but the eye color or your hair color.
Check the date of the indian holiday and iranian holiday (friday and saturday is closed but check on the web site of indian embassy in teheran for the holidays they are closed for).
Working hours at the embassy are 10 - 12.

When we first started we didn't realize how long it would take so it caused us some stress due to using up so much of our time in Iran, we travelled during the first part when you still have your passport. Then took a bus back to Tehran for the second part when they take your passport, then felt stuck in the city.

Hope this is helpful if you have any question just ask we will try to reply asap.

__________________
From Italy heading East by Vespa September 2012