India has signed a 10-year agreement with Iran to manage Chabahar Port, a key connectivity link to Afghanistan, Central Asia, and the Eurasian space. The move, amidst the election season, is seen as a significant geopolitical outreach to Iran, with potential consequences across the region. The long-term contract will boost regional connectivity and India’s linkages with Afghanistan, Central Asia, and Eurasia. This is the first time India will take over management of a port overseas, and the port will help counterbalance Pakistan’s Gwadar port and China’s Belt and Road Initiative.
The agreement, signed in May 2016, aims to handle over 4.8 million tonnes of bulk cargo, including trans-shipments from various countries. India has pledged to invest $85 million in the terminal and supplied cranes and other equipment worth $24 million. The agreement replaces an initial pact inked in 2016 that covered India’s operations at the Shahid Beheshti terminal of Chabahar port. The agreement is seen as a historic moment in the maritime sector, promoting trade, marine cooperation, and transshipment, as well as boosting trilateral trade between India, Iran, and Afghanistan. The port’s integration with a special free zone and India’s incentives have enhanced its appeal and facilitated economic growth.
Iran-India relations are focusing on transit and ports, with Mr. Elahi stating that signing the contract will generate new energy and restart stalled projects, fostering cooperation in all sectors, with Chabahar acting as the driver of relations. The Iranian envoy dismissed any potential conflict between India’s cooperation on Chabahar and Iran’s economic plans and obligations towards other countries, stating that the agreement for Chabahar port development was signed years before China’s One Belt One Road project.
India and Iran are working on a long-term agreement for IGPL’s operations at Chabahar port, as China shows greater interest in investments in Iran’s ports and coastal infrastructure. Chabahar is seen as a hub for the International North-South Transport Corridor, allowing shipping companies to bypass the Persian Gulf and Strait of Hormuz. The issue holding up the agreement was the jurisdiction for arbitration of differences, as Iran’s Constitution prohibits foreign courts from referring disputes to foreign courts. A proposal under the agreement required a constitutional amendment.
India’s investment in Chabahar port will enhance its efficiency and capacity, demonstrating its commitment to the region’s economic development. The port will also be used for humanitarian aid shipments, demonstrating India’s support for regional development beyond commercial interests. Chabahar’s significance lies in its vital trade artery connecting India with Afghanistan and Central Asian countries. The port’s connectivity is a significant issue, and the International North-South Transport Corridor with Iran, Russia, and Chabahar will connect the region to central Asia and other parts of the world.
The agreement strengthens India’s relations with Iran, which has been developing the port to transport goods to Iran, Afghanistan, and central Asian countries. India and Iran have signed a long-term deal to develop Chabahar Port, a vital trade artery connecting India with Afghanistan and Central Asian countries. The agreement, signed between Indian Ports Global Limited (IPGL) and the Port & Maritime Organisation of Iran, will invest around $120 million, with an additional $250m in financing. The deal aims to strengthen supply chain resilience across the region and provide joint access to regional markets. The deal signifies the enduring trust and effective partnership between India and Iran, with the contract’s value reaching $370m. The deal aims to strengthen the region’s supply chain and trade.
Iran and India have concluded short-term leases due to delayed long-term agreements, including arbitration, which was deemed one of the most significant disputes between the negotiators, according to Iranian Ambassador to India Iraj Elahi. The two sides have reached a mutually agreed-upon formula for resolving disputes, ensuring they are resolved in a mutually trusting atmosphere and by the will of the heads of the two countries, according to the agreement.
. In August 2023, Modi met Iranian President Ebrahim Raisi in Johannesburg to discuss the pending long-term contract on Chabahar. They acknowledged the port’s ad hoc nature, not due to issues on the Indian side but over partner combinations in Iran. External Affairs Minister S. Jaishankar stated that the long-term agreement would facilitate larger investments in the port. The agreement aims to improve transportation and transit in the region.
Sumaira Haneef
Sumaira Haneef is a student of Educational Leadership & Management from International Islamic University, Islamabad.
