• India
  • May 14

India, Iran sign 10-year agreement for operations at Chabahar Port

• India signed a 10-year contract to operate the Shahid Beheshti terminal at Chabahar Port in Iran that will help it expand trade with Central Asia.

• The Chabahar Port on the Gulf of Oman will provide Indian goods a gateway to reach landlocked Afghanistan and Central Asia using a road and rail project called International North-South Transport Corridor, bypassing Pakistan.

• US sanctions on Iran over its suspected nuclear programme had slowed the development of the port.

• The long-term agreement was signed by Indian Ports Global Limited (IPGL) and the Port & Maritime Organisation of Iran.

• IPGL will invest about $120 million while another $250 million will be raised as debt.

• The India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, facilitated the first consignment of exports from Afghanistan to India in 2019.

• The pact was signed in a ceremony attended by India’s Ports, Shipping and Waterways Minister Sarbananda Sonowal and Iranian Transport and Urban Development Minister Mehrdad Bazrpash in Tehran on May 13.

• It replaced an initial 2016 pact, which covered India’s operations at Shahid Beheshti terminal in Chabahar port and had been renewed on an annual basis.

• This 10 year long term agreement further strengthens the bilateral ties between the two countries while bolstering confidence and boosting trust of trading communities from the region.

• The agreement paves the way for enhanced trade and investment opportunities which will potentially boost India’s economic development.

Chabahar is of strategic importance to both Iran and India 

• Located in Sistan-Balochistan province on the energy-rich Iran’s southern coast, the Chabahar port is being developed by India and Iran to boost connectivity and trade ties.

• The strategic location of Chabahar has a great advantage for developing it as a trans-shipment hub. 

• It is located on the Indian Ocean in the Sistan and Baluchistan province of Iran.

• The Port’s deep draft of 16m is suitable for handling large shipment vessels. 

• The Port lies close to some of the busiest trade routes in the world. The region comes under the Asia-Europe, Asia-Asia trade route, which carries large cargo volumes.

• India has been pushing for the Chabahar port project to boost regional trade, especially for its connectivity to Afghanistan.

• The port, which is easily accessible from India’s western coast, is increasingly seen as a counter to Pakistan’s Gwadar port, which is being developed with Chinese investment.

• Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland Highway, setting up road access to four major cities in Afghanistan — Herat, Kandahar, Kabul and Mazar-e-Sharif.

• India and Iran have projected the port as a key hub for the International North–South Transport Corridor (INSTC) project. 

• The INSTC is a 7,200-km-long multi-mode transport project for moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.

• India has been developing a part of Chabahar Port and discussions on the development of the port date back to 2003 during Iranian President Muhammad Khatami’s visit to India.

• In 2013, India committed to investing $100 million towards the development of Chabahar Port.

• A memorandum of understanding (MoU) for development of Chabahar Port by India was signed in May 2015. Thereafter, the contract was executed on May 23, 2016, at Tehran (Iran) during the visit of Prime Minister Narendra Modi to Iran.

• Chabahar is an oceanic port. By leveraging Chabahar Port, India aims to bypass Pakistan and establish direct access to Afghanistan and beyond, into Central Asia. 

• Kandla port in Gujarat is the closest to the Chabahar port at 550 nautical miles while the distance between Chabahar and Mumbai is 786 nautical miles.

• The operations continued through short-term contracts while negotiations on the long-term agreement picked pace with the visit of Sonowal to Chabahar in August 2022.

• Chabahar port was used by India in 2023 to send 20,000 tonnes of wheat aid to Afghanistan. In 2021, the same was used to supply environmentally friendly pesticides to Iran.

• This is the first time India will take over the management of an overseas port that will also have a multiplier effect on trade among India, Iran and Afghanistan as efforts continue to directly tap the potential in Central Asia, bypassing neighbouring Pakistan.

US warns India of risk of possible sanctions

• The US has warned India of the risk of possible sanctions after New Delhi signed a pact with Iran on Chabahar port. 

• State Department Deputy Spokesperson Vedant Patel told reporters at his daily news conference that Washington was aware that Iran and India had signed a deal concerning the Chabahar port for a period of 10 years.

• On May 8, 2018, the then US President Donald Trump announced his decision to cease the country’ participation in the Joint Comprehensive Plan of Action (JCPOA) with Iran and to begin re-imposing the US nuclear-related sanctions that were lifted to effectuate the JCPOA sanctions relief, following a wind-down period. 

• The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals.

• The US has provided a rare exemption to India from sanctions on the Chabahar port in Iran.

• India has maintained that the Iranian nuclear issue should be resolved through dialogue and diplomacy by respecting Iran’s right to peaceful uses of nuclear energy as also the international community’s strong interest in the exclusively peaceful nature of Iran’s nuclear programme.

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