Chabahar port contract signed during PM Modi’s Iran visit: Why the port is of strategic importance to India

By: | Published: May 23, 2016 4:54 PM

Prime Minister Narendra Modi during his Iran visit has signed the contract to develop Phase-1 of the Chabahar port.


Narendra Modi, Modi in Iran, Chabahar portSigning of the contract for Chabahar is the highlight of PM Modi’s two-day visit to Iran. (PTI Photo)

Prime Minister Narendra Modi during his Iran visit has signed the contract to develop Phase-1 of the Chabahar port. Signing of the contract for Chabahar is the highlight of PM Modi’s two-day visit to Iran. “The bilateral agreement to develop the Chabahar port and related infrastructure is an important milestone. India will provide $500 million for it.” said PM Narendra Modi.

The Chabahar port is located in Sistan-Balochistan Province on Iran’s southeastern coast and is of great strategic utility for India, which will get sea-land access route to Afghanistan bypassing Pakistan. India and Iran had in 2003 agreed to develop Chabahar on the Gulf of Oman outside the Strait of Hormuz, near Iran’s border with Pakistan.

The port lies outside the Persian Gulf and is easily accessed from India’s western coast. The Chabahar port is crucial to enhance connectivity with Afghanistan and Central Asia.

Chabahar is about 100 km from the Chinese-run Gwadar port in Pakistan, which is part of China’s $46 billion plan to develop China-Pakistan Economic Corridor aimed at opening new trade and transport routes across Asia.

From Chabahar port using the existing Iranian road network, one can link up to Zaranj in Afghanistan which is at a distance of 883 km from the port and then using the Zaranj-Delaram road constructed by India in 2009, one can access Afghanistan’s garland highway thereby establishing road access to four of the major cities of Afghanistan; Herat, Kandahar, Kabul and Mazar-e-Sharif.

The Chabahar project moved slowly because of western sanctions against Iran. The sanctions were lifted in January and since then India has been pushing for conclusion of an agreement.

The port project will be the first overseas venture for an Indian state-owned port. The Jawaharlal Nehru port, India’s biggest container port, holds a 60 per cent stake in Indian Ports Global while the Kandla port has the remaining 40 per cent.

India is blocked from land access to Afghanistan and through it to the central Asia countries because of opposition from Pakistan, which sees India’s expansive diplomacy in the region as a threat.

India, Afghanistan and Iran separately signed an agreement to set up a trade and transport corridor, with Chabahar as the hub.

Road and rail links are being built so that the land-locked Afghanistan can get access to the Iranian port as an alternative to the Pakistani port of Karachi.

India is negotiating the Chabahar project to facilitate the growing trade and investment with Iran and other countries in the region, notably Afghanistan and also to provide opportunities to Indian companies to penetrate and enhance their footprint in the region.

Recently during External Affairs Minister Sushma Swaraj’s visit to Iran, the two sides agreed that the contract and modalities for a $150 million credit for the port would be signed soon.

In February this year, the Cabinet chaired by PM Modi gave its approval to the proposal of the Ministry of Shipping for provision and operationalization of credit of $150 million from EXIM Bank for development of Chabahar Port.

The Centre has also approved a $400 million line of credit for the supply of steel rails from India, and IRCON officials are expected to visit Iran for discussions on the Chabahar-Zahedan railway link.

Indian Ports Global Pvt Ltd has signed a contract with Arya Bandar Company of Iran for developing two terminals and five multi-cargo berth in Phase-1. An agreement for Exim Bank providing a $150 million line of credit for the development of the Chabahar port has also been signed.

India Ports Global Pvt, a joint venture of the Jawaharlal Nehru Port Trust and the Kandla Port Trust, will invest $85 million in developing two container berths with a length of 640 metres and three multi cargo berths.

(With inputs from Agencies)

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