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India signs 10-year-deal with Iran to manage Chabahar Port: What is its significance?

India has signed a significant deal with Iran to take long-term operational control over a part of the Chabahar Port, which is very important to India's strategic and economic ambitions in Central Asia. This is the first time India will take over management of an overseas port.

Aveek Banerjee Edited By: Aveek Banerjee @AveekABanerjee Tehran Published on: May 13, 2024 17:26 IST
India, Iran, Chabahar Port
Image Source : MEA Union Minister Sarbananda Sonowal with the Iranian delegation at the signing ceremony of the deal on Chabahar Port.

In a major leap forward, India signed a 10-year agreement with Iran on Monday to control a part of the crucial Chabahar Port in the presence of Union Shipping Minister Sarbananda Sonowal. This marks an important achievement for India's strategic ambitions as well as its relations with Tehran, as it has heavily invested in the port that offers the means to counter-balance Pakistan's ports and China's Belt and Road Initiative (BRI).

This is the first time India will take over management of an overseas port. This also underscores a major achievement in India's growing maritime ambitions, after New Delhi approved a proposal last month to take over operations at Myanmar's Sittwe Port in the Bay of Bengal, aimed at countering Chinese influence. Sonowal inaugurated the Sittwe port in Myanmar exactly a year ago - in May 2023.

"As and when a long-term arrangement is concluded, it will clear the pathway for bigger investments to be made in the port," External Affairs Minister S Jaishankar told reporters in Mumbai on Monday. The Chabahar Port featured heavily in talks between Prime Minister Narendra Modi and Iranian President Ebraham Raisi during the BRICS and G20 Summits, as well as over a phone call in November.

Why is the Chabahar Port important for India?

The Chabahar port has strategic and economic significance for New Delhi. It allows India to bypass its rival Pakistan's ports in Karachi and Gwadar and reach land-locked Afghanistan and Central Asian countries, and also offers a counter-response to China's touted BRI project. It also opens up a new vista of economic opportunities for business communities to explore an alternative transit route from the sensitive and busy Persian Gulf and Strait of Hormuz.

The port also helps India avoid logistical challenges in delivering critical humanitarian assistance and trade supplies to Afghanistan and serves as a gateway to central Asia. India aims to make Chabahar Port a transit hub under the International North-South Transport Corridor (INSTC) to reach out to CIS (Commonwealth of Independent States) countries. INSTC is India's vision to economise the movement of cargo between India and Central Asia, and the Chabahar Port would act as a commercial transit centre for the region.

"It will see more connectivity linkages coming out of that port. And we believe today that connectivity is a very big issue in that part. International north-south transport corridor, which we're doing with Iran-Russia, Chabahar will connect us to that, also to Central Asia," said Jaishankar on Monday.

The INSTC envisages the movement of goods from Mumbai to the Shahid Beheshti Port - Chabahar (Iran) by sea, from Chabahar to Bandar-e-Anzali (an Iranian port on the Caspian Sea) by road, and then from Bandar-e-Anzali to Astrakhan (a Caspian port in the Russian Federation) by ship across the Caspian Sea, and after that from Astrakhan to other regions of the Russian Federation and further into Europe by Russian railways.

A brief history of the Chabahar Port

The Chabahar Port was inaugurated by Iran as early as 1973 and India expressed interest in developing the port in 2003. India donated $100 million to the infrastructure development of Chabahar after signing an MoU with Iran four years ago. The first pact on Chabahar was signed in 2016 when PM Modi visited Iran, when it was agreed upon that India would refurbish one of the berths at Shahid Beheshti Port, and reconstruct a 600-metre-long container handling facility at the port. Under the agreement, India would build a 600-metre (1,969-foot) cargo terminal and a 640-metre container terminal.

The first phase was developed and launched by then-President Hassan Rouhani in 2017, when India sent its first wheat shipment to Afghanistan. However, only a portion of the two berths have been finished because of deteriorating relations between the US and Iran after the election of US President Donald Trump in November 2016 which culminated with the reimposition of economic sanctions in 2018. In the same year, India took over the operations at the port.

The US later exempted the Chabahar Port from its sanctions on Iran, noting its important role in Afghanistan's reconstruction efforts. India later declared its to secure a long-term arrangement with Iran for managing the key port. These ambitions have taken on a new shape given the rapidly unfolding geopolitical tensions in the Middle East and uncertainties in the global energy market.

The resource-rich and land-locked central Asian countries like Kazakhstan and Uzbekistan are also keen on utilising the Chabahar port to unlock access to the Indian Ocean Region (IOR) and the Indian trade market. Despite Pakistan's attempts to woo these countries to use the Karachi port to access the IOR, India has convinced the administrations that Chabahar is a more attractive proposition.

ALSO READ | India-Iran ties hit new milestone, sign 10-year contract on operating Chabahar Port



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