Stay invested: On Chabahar and India-Iran ties (The Hindu)

Context: India should not adjust its relationship with Iran to changes in US foreign policy.

Why this article?

India has signed a 10-year deal with Iran to develop and operate the Chabahar Port.

By signing this deal, India has taken its infrastructure and trade partnership with the Islamic Republic to the next level.
With this landmark agreement, Iran’s Chabahar Port now belongs to India for the next ten years.

Related Facts:

The contract was signed between India Ports Global Limited (IPGL) and Iran’s Ports and Maritime Organization.
India will invest $120 million and provide a line of credit of $250 million to further develop the terminal it operates at Chabahar’s Shahid Beheshti Port and related projects.
INSTC will connect the two markets using a multi-modal logistics corridor through Chabahar’s vibrant Shahid Beheshti Port in Iran, thereby rationalising logistics costs, which will contribute to trade volumes between the two regions.

Background:

Conceived in 2003, the Chabahar project did not take off for years after the US and the UN imposed sanctions on Tehran over its nuclear programme.

The US withdrawal from the nuclear deal in 2018 and re-imposition of sanctions on Iran raised questions over India’s continued cooperation with Tehran. But India managed to get a waiver from the US sanctions, allowing it to operate the port through ad-hoc measures.

Importance of Chabahar Port for India

Connectivity: Chabahar Port is crucial to India’s connectivity plans. The Chabahar Port connects the prosperous Central Asian region to South Asian markets. It has emerged as crucial for trade, economic cooperation and people-to-people links between the two geographic regions.
Alternate Route: Provides an alternate route to Afghanistan and Central Asia without entering Pakistan, thereby enabling better trade with Central Asia.
Cultural and Political Linkages: Due to the potential of Central Asian markets, India-led interconnection has made the access of Central Asian countries to the Indian Ocean region secure and commercially viable. This connectivity will not only provide connectivity among themselves but will also bring in investments while furthering India’s cultural and political ties.

International North-South Transport Corridor: Chabahar is expected to be linked to the International North-South Transport Corridor (NSTC), which will bring India closer to Europe via Iran, Azerbaijan and Russia.
- As an alternative to the Suez route, a fully operational NSTC will reduce the time and money spent on intercontinental trade.

Geopolitical implications: The Chabahar port, located about 200 km from Pakistan’s Gwadar port as part of China’s BRI, will also help India expand its geopolitical influence in Central Asia.

US response in this context:

In 2018, when the US forces were supporting the Islamic Republic government in Afghanistan, it exempted India from sanctions as Kabul was also set to benefit from the port project.

The US has taken a narrow view of the project due to Iran’s unfriendly relations and has warned of possible sanctions on transactions with Iran.

With the withdrawal of US forces from Afghanistan and the Taliban coming to power, the US is focused on containing Iran.

Way forward

India has in the past taken a U-turn in its engagement with Iran based on policy changes in Washington DC. It should not do so now. It should continue to invest in Chabahar and try to improve its trade and connectivity projects with Central Asia, which is essential for India’s continued growth.

Important Facts

Chabahar is a deep-water port in the Sistan-Baluchistan province of Iran. It is the Iranian port closest to India and is located in the open sea. The port provides smooth and safe access for large cargo ships.
In January 2003, President Khatami and then Prime Minister Atal Bihari Vajpayee signed an ambitious roadmap of strategic cooperation. Chabahar was among the major projects agreed upon by the two countries.
India signed the Chabahar port agreement with Iran in 2015.
Chabahar port actually comprises two separate ports named ‘Shahid Kalantari’ and ‘Shahid Beheshti’.
International North-South Transport Corridor (NSTC)- It is an approximately 7,200 km long multi-modal transport corridor that connects St. Petersburg (Russia) to Mumbai via road, rail and sea routes.