India-Iran Agreement for Chabahar Port for 10 Year and Geopolitical Challenges

Context

• India and Iran signed a 10-year contract for the operation of the Shahid-Beheshti terminal at Chabahar port.
• The agreement was signed between Indian Ports Global Ltd. (IPGL) and Iran’s Port and Maritime Organisation (PMO).

Strategic Importance of Chabahar Port

• Location: Chabahar is a deep water port in Iran’s Sistan-Baluchistan province, strategically positioned closest to India, and provides access to large cargo ships due to its open sea location.
• Investment and Cooperation: IPGL will invest about $120 million in the port and has offered a credit window equivalent to $250 million for infrastructure improvement projects related to Chabahar.

Historical Background and Development

• Early Discussions: Initiated in the 1970s, the port’s strategic value was recognized during the Iran-Iraq war in the 1980s.
• 2002-2003 Agreements: Discussions in 2002 by Hassan Rouhani and Indian counterpart Brajesh Mishra led to a 2003 strategic cooperation roadmap signed by then President Khatami and Prime Minister Atal Bihari Vajpayee, focusing on linking South Asia to Central Asia and Europe through Chabahar.

Impact of International Politics

• S. Influence: India’s relationship with the US, particularly under President George W. Bush, impacted the Chabahar project as the U.S. pressured India to reduce its strategic ties with Iran.
• Renewed Progress: The project gained momentum post-2015 after Iran’s nuclear deal with P-5+1 countries.
  • Coordination among India, Iran, and Afghanistan led to the establishment of the International Transport and Transit Corridor in 2016.

Operational Achievements and Future Prospects

• Operational Since 2018: IPGL has been operating the port through India Ports Global Chabahar Free Zone since December 24, 2018.
• Cargo and Humanitarian Assistance: The port has handled over 90,000 TEUs of container traffic and more than 8.4 million metric tonnes of bulk and general cargo. It facilitated the shipment of 2.5 million tonnes of wheat and 2,000 tonnes of pulses to Afghanistan during the COVID-19 pandemic.

Chabahar and International North South Transport Corridor (INSTC)

• With the implementation of the long-term investment, Chabahar port is poised to become a crucial link between India and the landlocked regions of Central Asia and Afghanistan.
• For Chabahar to fully achieve its commercial and strategic potential, its development needs to be coordinated with the broader International North South Transport Corridor (INSTC) project.

• Initiated by Russia, India, and Iran, the INSTC is a comprehensive multi-modal transport route designed to connect the Indian Ocean and Persian Gulf to the Caspian Sea through Iran, and extending to northern Europe via St Petersburg, Russia.
• The INSTC facilitates the transport of goods from Mumbai to Bandar Abbas in Iran via sea, then by road to Bandar-e-Anzali on the Caspian Sea, followed by a sea crossing to Astrakhan in Russia, and finally by rail to other parts of Russia and Europe.
• Chabahar port and the INSTC complement each other in enhancing India’s connectivity with Russia and Eurasia.

Geopolitical Challenge

• The ongoing conflict in Ukraine and deteriorating relations between Europe and Russia have introduced complexities that affect the future prospects of the INSTC.

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