13, Sep 2018
Prelims level : International Mains level : Paper – II Bilateral, Agreements Involving India
India and Iran have stuck to the agreed timeframe in its plans to hand over the operational responsibility of a part of the Chabahar port to an Indian entity in October as per an interim pact.
- As per agreement, Iran are now ready to hand over the port (Chabahar) to the Indian company.
- In May 2016, India and Iran signed a bilateral agreement in which India would refurbish one of the berths at Shahid Beheshti port, and reconstruct a 600-meter-long container handling facility at the port
- Under the agreement signed between India and Iran earlier, India is to equip and operate two berths in Chabahar Port Phase-I with capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease
- In October 2017, India’s first shipment of wheat to Afghanistan was sent through the Chabahar Port
- The Iranian commitment to handover the port facilities in October is significant as just in July Tehran had conveyed displeasure to India regarding alleged slow investment from New Delhi into the project. As US has made the trade between the two sides uneasy, US sanctions will from November will block payment gateways.
- The port of Chabahar is located on the Makran coast of Sistan and Baluchistan Province, next to the Gulf of Oman and at the mouth of Strait of Hormuz in the south-eastern Iran. It is the only Iranian port with direct access to the Indian Ocean. Being close to Afghanistan and the Central Asian countries of Turkmenistan, Uzbekistan etc., it has been termed the “Golden Gate” to these land-locked countries.
- The India-Iran-Afghanistan three-way memorandum of understanding (MoU) plans have committed at least $21bn to Chabahar-Hajigak corridor including $85m for Chabahar port development by India, $150m line of credit by India to Iran, $8bn India-Iran MoU for Indian industrial investment in Chabahar Special Economic Zone.
- The port is intended to provide an alternative for trade between India and Afghanistan. This port is 800 kilometers closer to Afghanistan than Pakistan’s Karachi port
Important of Chabahar port: / For IRAN:
- It serves as Iran’s only oceanic port, and consists of two separate ports named Shahid Kalantari and Shahid Beheshti, each of which has five berths.
- As 90 percent of Iran’s population is concentrated in the western part of the country, the eastern part is relatively less Iran is intending to change that by the development around Chabahar port, with a free trade zone, and road and rail links between Chabahar and Central Asia.
- Chabahar port as the gateway to Central Asia and maintain the Bandar Abbas port, which currently handles 85% of Iran’s seaborne trade, as a hub for trade with Russia and Europe.
- Moreover Bandar Abbas, which is located in the congested waters of the Straits of Hormuz, subject to constant US naval patrol, Chabahar is located further east and is the only Iranian port with direct access to the Indian Ocean.
- As Iran’s desire to be seen as a significant regional player, Chabahar port initiative is to engage with all the neighbouring countries to enhance the transit potential of Chabahar.
- Iran became a key partner in the International North-South Transport Corridor (INSTC) along with Russia, Ukraine, Turkey, Oman, Syria, India and the Central Asian
- countries, by developing the port. Boost to Iron ore, sugar and rice exports (all top import items in Iran) which have been Can provide a link promote cultural linkages between India and Iran.
- There will be increase in significant Indian- Iranian naval cooperation, commercial maritime cooperation and joint transportation infrastructure development has elevated the level of Indo-Iranian strategic cooperation.
- Would provide an alternative access to trade with Afghanistan bypassing Pakistan. Also Counter the Chinese presence in the Arabian Sea through the support to Pakistan in developing Gwadar port
- The free-trade zone around the port can be an important trade centre with West Asia.
- Reduced Current Account Deficit: Reduced transportation costs will allow India to import crude oil, urea and dry fruits at lower prices. As the import cost of oil would reduce many folds; India investing fertilizer plant in Iran, could potentially saves 50% of fertilizer subsidy.
- Because of easy access to central Asia, India’s plan to setup fertilizer plant in countries like Mongolia would be released soon.
- Can be used to station security vessels for merchant ships off the African coast. Also helps in coordinating the humanitarian operations such as mass evacuation of refugees.
- IPI pipeline has been so long stalled due to the Pakistan’s presence. For this Chabahar port Could help the underwater pipeline bypassing the Pakistan.