On Monday, India signed a contract with Iran for developing and operating the Chabahar port in Iran’s Chabahar town in the presence of India’s Shipping Minister, Sarbananda Sonawal and Iran’s urban development minister Mehrdad Bazrpash. The agreement gives India 10-year access to use the port.
“Minister Sarbanand Sonwal witnessed the signing of the long-term contract for the operation of the Shahid Beheshti Port in Chabahar, between India Ports GlobalLtd. & Ports and Maritime organisation of Iran,' MEA spokesperson Randhir Jaiswal said.
🇮🇳🇮🇷| Scripting a new chapter in bilateral partnership!
Minister @shipmin_india & @moayush @sarbanandsonwal witnessed the signing of the long-term contract for the operation of the Shahid Beheshti Port in Chabahar, between India Ports Global Ltd. & Ports and Maritime… pic.twitter.com/hUddkyQrkE— Randhir Jaiswal (@MEAIndia) May 13, 2024
About the Agreement
According to Iranian Minister of Roads and Urban Development Mehrdad Bazrpash, IPGL will commit to further equip and operate the port for the term of the contract, with an investment of about $120 million and an additional $250 million in financing, bringing the contract's total value to $370 million.
In 2024–2025, the Ministry of External Affairs (MEA) committed Rs 100 crore for Chabahar Port, demonstrating India’s commitment to connectivity initiatives with Iran.
"With the signature of this contract, we have laid the foundations of India's long-term involvement at Chabahar," Minister Sarbanand Sonowal said in a statement on the occasion.
He added, "The long-term contract symbolises the enduring trust and effective partnership between India and Iran.”
Tehran, #Iran | Historic vistas in 🇮🇳-🇮🇷 ties, regional connectivity and India's linkages with Afghanistan, Central Asia and Eurasia under the dynamic leadership of Hon'ble PM Shri @narendramodi ji.
📷 Signing of the long-term contract for the operation of Shahid Beheshti Port… pic.twitter.com/VOtOTDPMBd— Sarbananda Sonowal (Modi Ka Parivar) (@sarbanandsonwal) May 13, 2024
At the end of the 10-year period, both sides would further extend their cooperation in Chabahar.
U.S. State Department deputy spokesperson Vedant Patel, asked about the deal, reacted strongly to the deal, he said, "Any entity, anyone considering business deals with Iran - they need to be aware of the potential risks that they are opening themselves up to and the potential risk of sanctions.”
Significance of Chabahar?
Chabahar is a deep water port located in the Sistan-Baluchistan province of Iran, developed jointly by India and Iran. It is the closest Iranian port to India and offers significant maritime advantages.
"It will clear the pathway for bigger investments to be made in the port," Indian Foreign Minister Subrahmanyam Jaishankar said.
Trade and Access to Central Asia
India is making a long-term investment in Chabahar, as India views Chabahar Port as very crucial for a strategic trade route, which is used to transport goods to Iran, Afghanistan and central Asian countries.
India said the deal has unlocked new avenues for trade as the contract will give a boost to regional connectivity & India’s linkages with Afghanistan, landlocked yet resource-rich Central Asian republics and Eurasia.
Chabahar will serve as a gateway to the Indian Ocean region and the Indian market for countries rich in resources and are eager to trade, like Kazakhstan and Uzbekistan, making it a more economical and stable route.
"Chabahar Port’s significance transcends its role as a mere conduit between India and Iran. it serves as a vital trade artery connecting India with Afghanistan and Central Asian countries,” Sonawal said after the signing,” India's Shipping Minister Sarbananda Sonowal said in Tehran, after the signing of the agreement.
"This linkage has unlocked new avenues for trade and fortified supply chain resilience across the region,' he added.
At Tehran, Iran today, delighted to be part of the signing of the Long Term Bilateral Contract on Chabahar Port Operations in presence of HE Mehrdad Bazrpash, Minister of Roads & Urban Development, Iran.
India will develop and operate Iran's strategic Chabahar Port for 10… pic.twitter.com/iXwekIk8ey— Sarbananda Sonowal (Modi Ka Parivar) (@sarbanandsonwal) May 13, 2024
The port is envisioned by Iran and India as a major INSTC project hub. A multi-modal transport project spanning 7,200 km, the INSTC is designed to move freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia, and Europe.
Additionally, there are plans to link Chabahar to the International North-South Transport Corridor (INSTC), creating a path via Iran that would connect Russia and India.
Also Read: Iran releases 5 Indian crew members from seized vessel MSC (vygrnews.com)
Counter to Pakistan and China
Indian involvement in Chabahar, however, is strategically significant since it is a component of India's outreach to Iran. Strong ties with Iran are seen by India as a retaliation against Pakistan, which maintains a land blockade over the country.
Also, it will act as a counterbalance to Pakistan's Gwadar Port as well as China's Belt and Road Initiative, offers India an alternative pathway to Afghanistan and Central Asia avoiding the rival Pakistani ports of Gwadar and Karachi.
Also Read: Iran’s President visits Pakistan amid Tensions (vygrnews.com)
Pakistan has long been trying to persuade central asian nations to use Karachi port in order to gain access to the Indian Ocean region. Also, Armenia is also interested in using the INSTC to connect to the port of Chabahar.
Chabahar is a counter to China's plans to develop Pakistan's Gwadar port. Less than 100 kilometres from Gwadar, the deep water Chabahar port, which is near Iran's southeast border with Pakistan.
As India is concerned about China’s Belt and Road Initiative investments in ports and infrastructure in India's neighborhood, Chabahar will help India to increase its maritime presence.
India’s First time Managing an Overseas Port
The Chabahar becomes significant as this is the first time India will take over the management of an overseas port.Since 2016, India has been contributing to the development of Chabahar port by constructing new terminals and cargo berths, following an agreement on Chabahar that was made during Modi's visit to Iran.
During the visit of Iran's president Hassan Rouhani to India in 2018, the topic of increasing India's involvement in the port was a major talking point. It was also discussed in January 2024, during Foreign Minister S Jaishankar's visit to Tehran.
(Inputs from Agencies)
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