Significance of Chabahar Port As India Seals The Deal With Iran

Prime Minister Narendra Modi with Iranian President Hassan Rouhan
Prime Minister Narendra Modi with Iranian President Hassan Rouhan

In a bid to boost ties with Iran after sanctions against it were lifted earlier this year, Prime Minister Narendra Modi was in the country on a two-day visit. Modi, first Indian Prime Minister to visit Iran in the last 15 years, was on a strategic state visit to discuss bilateral business investment, trade, infra-structure and energy issues.

After being met at the airport Modi along with Union Transport Minister first visited the local Bhai Ganga Singh Sabha Gurdwara in Tehran. PM Modi was accorded a ceremonial welcome on the front courts of the official Saadabad Palace in Tehran by Prime Minister Hassan Rouhani of Iran.

He held meetings with top leaders of Iran including a 30 minute private session with President Hassan Rouhani. Modi also met the country’s top religious and political leader Ayatollah Khomeini.

Modi also held formal talks with Rouhani on Monday at Ufa to discuss cooperation in ports, petrochemical and fertiliser sectors. During his visit, PM Modi inaugurated ‘Retrospect and Prospect’, an international conference on India-Iran relations.

The main agenda for Modi’s visit was the signing of a tripartite agreement between Modi, Rouhani and Afghan President Ashraf Ghani for India to build and run a port at Chabahar, in the Gulf of Oman on Iran’s southern coast with Afghanistan. The port is strategically located outside the Persian Gulf and easily accessed from India’s western coast.

A joint venture between the Nehru Port Trust and Kandla Port Trust, Indian Ports Global Pvt signed a deal to develop two terminals and five multi-cargo berths in Chabahar.

The port will allow India easy connectivity to Afghanistan with whom India has close security and economic ties, and on to Central Asia for the transportation of goods without having to pass via Pakistan. Pakistan has not been allowing India to transport goods through its country and has only recently allowed restricted access.

Nitin Gadkari Transport, Highways and Shipping Minister said that this would allow quick movement of goods first to Iran and then onwards to Afghanistan and Russia through a new rail and road link. From Chabahar a road link can be established up to Zaranj in Afghanistan which is about 883 kms from the port.

In 2009, India had constructed the Zaranj-Delaram road which gives access to Afghanistan’s Garland highway allowing road connectivity to the four major cities of Herat, Kandahar, Kabul and Mazar-e-Sharif.

India will invest around $200 million to develop the Chabahar port. In the first phase which will take 18 months, terminals and cargo berths would be built at Chabahar.

In the second phase, India’s PSU IRCON will construct a 500-km railway line between Chabahar and Zahedan.

“This would be a historic event which will herald in a new era of development.” Gadkari said.

After signing the deal President Hassan Rouhani said, “Chabahar port can serve as a point of connectivity between different countries, specially India and Afghanistan, also east of Europe.”

“Considering that both countries have an important port like Chabahar, we can have vast cooperation.” he added.

The port project would be the first venture overseas for an Indian state owned port. It is also being seen as a counter balance to the Gwadar port in Pakistan which was built by China and is only about 72 km from Chabahar.

India will also build a 0.5 million ton aluminium smelter plant to be set up by Napco as well as urea manufacturing factories in Chabahar free trade zone.

India is also seeking to double its oil imports from Iran as well as inking a deal to develop the huge Farzad-B oil field.

While Modi visits Iran, Indian refineries are clearing part of the $6.4 billion debt owed to Iran for imports of crude oil. Mangalore Refinery and Petrochemicals Ltd have paid $500 million while Indian Oil Corporation has paid $250 million. This is the first installment of the payments.

Prime Minister Modi said, “We also have shared concerns at the spread of forces of instability, radicalism and terror in our region. We have agreed to consult closely and regularly on combating threats of terrorism, radicalism, drug trafficking and cyber crime.”

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