Importance of Chabahar port for Iran and India

Diplomacy is tough. It’s bone-crunching. Sometimes you have to wait for decades to see the results while other times, it gives instant gratification. But the moment a country stops, it throws itself out of the game. This is the reason why India’s patience with respect to Iran’s Chabahar port is commendable. The port will soon be under our control.

India-Iran are close to signing Chabahar deal

According to a report by Hindustan Times, India and Iran have only minor issues to sort out before handing over Chabahar’s control to India. If the deal is finalised, then India will gain another 10 years to boost its connectivity in Central Asia. Moreover, reports of talks about automatic extension of the deal are also emerging from Foreign Affairs circle.

In August, Sarbananda Sonowal, India’s Minister for ports, shipping and waterways, visited Iran. The prospects of a long-term deal got a further boost during his visit. Apparently, only minor issues are currently hampering the deal. One of them is the way in which parties will solve arising conflicts. Iranian Constitution does not allow arbitrations arising in its geography to be solved outside. On the other hand, the Indian side is demanding that arbitration proceedings should be solved on neutral forums. Currently, a constitutional amendment in Iran is difficult and that is why legal and technical experts are trying to chalk out a middle way.

Importance of Chabahar port for Iran and India

Chabahar port is possibly the most important strategic port for both Iran and India at the current juncture of time. The main reason behind it is its location and capacity to control heavier cargo routes. Iran has two main ports. One of them is Bandar Abbas port and the other is Chabahar port. The problem with Bandar Abbas port is that it is highly congested due to it not being a deep-water port. Bandar Abbas can only handle cargo ships which can carry 1 lakh tons or less, while most of the cargo ships carry 2.5 lakh tonnes of cargo. For Iran, it increases its dependence on the UAE where 2.5 lakh tons capacity ships are docked and cargo is then transferred to smaller ships. In the wake of increasing tensions between Gulf nations and Iran, it is imminent that Iran would like to minimise the use of Bandar Abbas port.

This is where Chabahar port comes in handy for Iran. It is the only Iranian port in Iran with direct access to the Ocean. It is located in the Sistan-Balochistan province of Iran. Did the word Balochistan ring a bell? Of course, yes and this is where India’s strategic interest comes in. Chabahar port is located just 72 kilometres away from Gwadar port of Balochistan which is under Pakistan’s occupation. Gwadar port is currently a focal point of the dying China-Pakistan Economic Corridor (CPEC). China wanted to use Gwadar as an Asian cross-section of the marine part of its Belt and Road initiative. This is one of the reasons why India sometimes expressed too much eagerness in recent years for getting control of Chabahar port.

Chabahar is important for INSTC

However, the China angle is more recent and it was exacerbated only after Xi Jinping came to power with imperialist ambitions. Under the able leadership of former Prime Minister Atal Bihari Vajpayee, Indian policymakers had foreseen its importance way back in the late 90s. During those times, a small but significant rise of leaders with long term vision was just becoming a trend. In Russia, Putin had just got control of the government while in India, PM Vajpayee was an established and formidable leader among the masses.

On this day, as of 12th September, we are celebrating the 22nd anniversary of establishment of the International North-South Transport Corridor (INSTC). The corridor is 7,200 km long. It connects India’s Mumbai to Russia’s St. Petersburg. North and West Europe, Persian Gulf, Central Asia, and Caspian Sea are some of the major components of this corridor. INSTC has brought down the carriage cost by more than 30 per cent while the transit time has been reduced to 20 days from earlier 40 days. If its full potential is realised then INSTC will drastically reduce India’s energy dependence on the Gulf. Currently, INSTC is operational and is being touted as a route which will put the final nail in the coffin of Western hegemony on traditional trade routes.

India’s early recognition of Chabahar’s potential

But geographical complications make it compulsory for India to take Iran’s Chabahar port on board. Due to earlier stated reasons Bandar Abbas always had the potential to derail the much-touted INSTC. In early 2000s, India’s Foreign Policy establishment brainstormed to find out a more feasible long-term plan and Iran’s decision to revive Chabahar port turned out to be a big boon for India.

In 2003, Vajpayee administration gave its nod to expand the Chabahar port and lay a railway track between Chabahar and Zaranj. Zaranj is a city in Afghanistan bordering Iran. During PM Vajpayee’s days, relations between post-Taliban Afghanistan and India were in good shape. India was looking for a way to help Afghanistan and simultaneously expand its trade footprints way beyond Afghan geography.

One option for India was to do it through Pakistan, but the terrorist nation can never be relied upon for it. So, India also constructed a road from Delaram in Afghanistan to Zaranj at the Iran-Afghanistan border. It cost $134 million to the Indian exchequer. Apparently, India’s thinking behind all these projects in Afghanistan was that the control of Shahid Beheshti section of Chabahar will help its businesses get more orders.

Western Sanctions complicated it

Meanwhile India did follow all due diligence in Afghanistan, the western sanctions turned out to be a dampener for India’s prospects in Iran. Fearing backlash from the west, Manmohan Singh government did not express enthusiasm in Chabahar port. The fear got ingrained among the establishment which is evident from the fact that India was not willing to gain a foothold in Chabahar at the time when the pro-Iran Obama government was in charge of America.

Finally, in May 2015, both countries agreed to operate two berths at the port for 10 years. India Ports Global, a joint venture between Jawaharlal Nehru Port Trust and Kandla Port Trust, in partnership with Iran’s Aria Banader were selected to jointly operate the berths for 10 years. In May 2016, India, Iran and Afghanistan signed a trilateral agreement. 12 memorandums of understanding were also signed in order to facilitate India’s access to Afghanistan and through it to the Central Asian region.

Commitment for Afghanistan

To make it seamless, all 3 countries committed at least $21bn to the Chabahar–Hajigak corridor from Iran to Afghanistan. India also gave a $150 million line of credit to Iran. 7 Indian companies have already been awarded the $11-billion worth of Hajigak iron and steel mining project in central Afghanistan. India has also committed $2bn to Afghanistan for developing supporting infrastructure including the Chabahar-Hajiganj railway.

Chabahar port specific commitments of India

India has pledged that it would invest $85 million dollars in the development of the terminal. India would mainly invest in modernising ancillary infrastructure by installing four rail-mounted gantry cranes, sixteen rubber-tire gantry cranes, two reach stackers, two empty handlers, and six mobile harbour cranes. Moreover, India also agreed to invest $8 billion in the Chabahar Special economic zone. Iran is developing this economic zone in order to use Chabahar as a gateway to Central Asia. For this purpose, a free trade zone and road and rail links are also in the pipeline.

Nitin Gadkari, India’s minister of Road Transport and Highways has expressed interest around the zone as well. His analysis suggests that Indian companies could invest 1 lakh crore in the zone with the caveat that Indian companies would want cheaper natural gas from Iran. All of these aforementioned technological upgrades and handling and investment proposals are slated to increase Chabahar’s capacity to handle 8 million tons of cargo. In 2016, the year in which the tripartite agreement was signed, it could only handle 2.5 million tons. Apart from strategic, India’s long-term economic advantage from the port is also attached. A fully operational Chabahar will enable 60% reduction in shipment costs and 50% reduction in shipment time from India to Central Asia.

Developments have been satisfactory to say the least

After a few months of India’s first shipment of wheat to Afghanistan routed through Chabahar, IPGL officially took control of the port. It has handled more than 4.8 million tonnes of bulk cargo till now. In 2018 itself, India and Iran signed an agreement worth $2 billion for cooperation in the railways sector. By that time, India’s Aatmanirbharta (self-reliance) in Railways manufacturing had started to grab international headlines and India wanted to benefit from it. The agreement was slated to enable Iran to purchase locomotives and freight cars worth $600 million from India.

The Indian government was also eager to invest in the Chabahar-Zahedan rail link but American dilly-dallying on the sanctions regime meant that private Indian companies found it too risky to pitch in with full intensity. In 2020, Iran took it upon itself to construct a 700 km long railway line. However, nearly 200 kilometres are still remaining and the Biden administration at the helm of affairs in the US means that there is leeway for Iran.

Indian companies did not and in fact even today do not want to collaborate with a company which could invite Wester Sanctions on them. Meanwhile, within two years India’s might in railways sector has expanded exponentially and that is why Iranian government is pitching another Iranian company for the development of the leftover 200 km stretch of the work.

India’s balancing act between Gulf and Iran

With the final authority on Chabahar port, India is walking the talk of Aatmanirbhar foreign policy. Through being on friendly terms with Iran and Russia, it is giving a message to West Asian countries that energy is not our weakness. Russia has already emerged as a thorn in the flesh of OPEC autocrats. Now with the strategic and economic potential of India-Iran ties manifesting itself in the open, West Asia is getting the message that was needed to be communicated to it for decades.

On the other hand, things are not bad in the Middle East as well. India is on good terms with almost every Arab nation. With Israel coming to the fore for I2U2, Iran will not be willing to offend India or harm its interests. In fact, it is already visible in geopolitical equations. In the wake of the Nupur Sharma incident, both Iran and its Islamic rivals Gulf had come forward to criticise India. Soon, India beautifully manoeuvred between the geographical blocs. While, UAE President broke protocol for greeting PM Modi at the airport, Iran was eager to ask for more of India’s presence in the Chabahar Economic Zone.

That is some balancing of interests.