Before Partition, the town of Chabahar (earlier known as Tiz) was right at India’s doorstep, situated in Iran’s Sistan Baluchistan province where the Panchatantra was once read in Persian (entitled ‘Kalileh-wa-Dimna’), and Hindustani Urdu is understood and spoken commonly. But ties between independent India and Iran, before the 1979 revolution, were never very close, given the Shah’s U.S.-tilt, and India’s Non-Alignment push. In 1970, it was the Shah who first conceived of developing Chabahar (he even planned a U.S. submarine base there), given its salubrious weather and the fact that the warm-water port was Iran’s only such foothold in the Indian Ocean, strategically located just between the Gulf of Oman and the Strait of Hormuz.

In 1993, Prime Minister Narasimha Rao travelled to Tehran for a path-breaking visit to build a new relationship with the Iranian regime. While the visit shored up Tehran’s invaluable support to India on the international stage (Iran famously stopped a Pakistan-backed Organisation of Islamic Cooperation (OIC) proposal against India at the UN HRC in 1994 after an air-dash visit by then Foreign Minister Dinesh Singh to request President Ali Akbar Rafsanjani’s help), it also began a conversation between the two countries over Chabahar.

In the 1990s, Iran offered India a chance to develop Chabahar, and some groundwork was laid. But it wasn’t until Prime Minister Atal Bihari Vajpayee’s visit to Tehran in 2001 and then President Mohammad Khatami’s visit to Delhi as the chief guest on Republic Day in 2003 that discussions sealed the Chabahar deal between the two countries. According to the Delhi Declaration signed by both leaders, the two countries decided to build the sea link from India to Chabahar, and “through Chabahar to the National Iranian Rail Road”, enabling India to connect to Central Asia and Europe.

Iran invited India to develop a railway link from Chabahar to Bam, a city from where links to both Afghanistan and Turkmenistan could be made. Through the North-South Corridor (now called the INSTC), India would be linked through Iran to Russia as well.

Afghanistan was always part of the conversation over Chabahar. The 2003 India-Iran joint statement recorded that “India and Iran have cooperated closely on Afghanistan, especially in the shared objective of ridding that country of the evil Taliban forces. We agreed that our joint effort should now be to promote strong construction and rehabilitation work in that country including through development of alternate trade routes to Afghanistan through Iran as well as by undertaking a joint rail and road reconstruction project.”

Strategic location

For India that has traded with Iran through the Bandar Abbas port for centuries, Chabahar’s chief attraction was not about its trade, but its location vis-à-vis Pakistan. Islamabad’s constant resistance to allowing Indian trade to transit through to Afghanistan meant that the Chabahar route, through the Iranian border town of Zaranj, was the most viable alternative. In 2005, India also began the perilous construction of Route-606 or the Zaranj-Delaram Highway, which connected the border crossing from Iran to the rest of Afghanistan, in order to facilitate the trade. Its importance gleaned from the sacrifices made for it — as many as 135 personnel working on the highway were killed in attacks by the Taliban, including six Indian border road and ITBP personnel.

As a result, the Chabahar dream began to take shape as a hub of connectivity, with immense strategic potential as well as the desire to help Afghanistan, riven by bloodshed, to build a new future for itself. Over the years, Chabahar’s progress was sporadic, constrained by the U.S.’s sanctions and demands on India to sever ties with Iran, and often spurred on by the challenge of China’s competitive moves in the region. In 2012, U.S. Secretary of State Hillary Clinton said she was having “very intense and very blunt” conversations with India and other countries urging them to join the U.S. in “isolating Iran” in a bid to pressure Tehran into acceding to terms for the Joint Comprehensive Plan of Action (JCPOA), the multi-party nuclear deal.

India didn’t concede to U.S. demands, and although buyers cut oil imports by around 20%, the government went ahead on Chabahar. In 2012, as China began its maritime forays in the Indian ocean, India sent its first shipment of 100,000 tonnes of wheat for Afghanistan to Chabahar port, using the rudimentary facilities there. In May 2013, three months after China announced it would develop Gwadar port off Karachi, External Affairs Minister Salman Khurshid flew to Tehran and announced that a trilateral partnership with Afghanistan was being readied, which would include the upgradation of Chabahar port.

In 2016, Prime Minister Narendra Modi joined Afghan President Ashraf Ghani and Iranian President Hassan Rouhani to sign the historic agreement, paving the way for India to invest $500 million to build the Shahid Beheshti terminal (one of the two terminals in the port) and a railway line to Zahedan. However, geopolitics played spoiler with Chabahar again. In 2018, U.S. President Donald Trump walked out of the JCPOA with Iran, and restored all sanctions in 2018.

Trouble in ties

While the Modi government was able to negotiate a ‘carve-out’ from sanctions for Chabahar as a means to support Afghanistan, it decided to cave in on other deals, and announced in 2019 that India had “zeroed out” all oil imports from Iran. The threat of sanctions slowed India’s responses on the railway project to Zahedan, and in August 2020, Iran dropped India from the project, deciding to go it alone. Another big shift followed the Taliban takeover of Kabul in 2021, and while India has kept its commitment on sending humanitarian aid to Afghanistan via Chabahar, trade has been sluggish. Despite all that, the Shahid Beheshti terminal has handled 90,000 TEUs of container traffic, 2.5 million tonnes of wheat and other aid for Afghanistan, and supplied 40,000 litres of pesticide for Iran.

The latest agreement, signed on Monday, saw Indian Ports Global Ltd and Ports and Maritime Organisation of Iran sign a 10-year Long Term Contract in Tehran in the presence of Shipping Minister Sarbananda Sonowal and his Iranian counterpart, with India promising an outlay of $120 million, and another $250 million credit line to further develop the project. This will spur the next phase of Chabahar’s development — with a plan to build 32 jetties and process about 82 million tonnes of cargo per year by the end of the fourth phase.

It remains to be seen whether the U.S. actually follows through on State Department comments raising the “risk of sanctions” against Indian companies participating in the contract, but the past few decades have shown that India’s interest in the port will remain. While the dream of Chabahar, as envisioned decades ago, has yet to be realised and the project has moved at a glacial place, it is now an irreversible reality, one whose location and geopolitical positioning, like its name (spring around the year), lend it an eternal charm.

Mumbai:

The signing of the Chabahar Port deal is a “landmark” in India-Iran economic relations and it offers various future investment opportunities, including the development of subsequent phases of the facility, a top Iranian diplomat said in a note.

These opportunities include development of the second phase of Shahid Beheshti Port as well as the third and fourth phases on BOT model, among others, Davoud Rezaei Eskandari, Acting Consul General of Iran in Mumbai, said in the note shared with Press Trust of India.

India on May 13 signed a 10-year contract to operate the strategic Iranian port of Chabahar that will help it expand trade with Central Asia.

The Chabahar Port on the Gulf of Oman – which New Delhi had proposed to develop way back in 2003 – will provide Indian goods a gateway to reach landlocked Afghanistan and Central Asia using a road and rail project called International North-South Transport Corridor, bypassing Pakistan.

The long-term agreement was signed by Indian Ports Global Limited (IPGL) and the Port & Maritime Organisation of Iran. It replaces an initial 2016 pact, which covered India’s operations at Shahid Beheshti Terminal in Chabahar Port and had been renewed on an annual basis.

“India and Iran are important trade partners. India has been among Iran’s five largest trade partners in recent years,” Mr Eskandari said.

“The signing of the 10-year contract for equipping and operating general cargo and container terminals at First Development Phase of Shahid Beheshti Port of Chabahar is a landmark in India-Iran economic relations,” he said.

As per the contract, India is committed to investing USD 120 million (through IPGL) for the necessary equipment and USD 250 million credit line for financing port development, taking the contract’s total value to USD 370 million, he said in the note.

Also, the deal brings investment opportunities in petrochemical and related industries as well as in the construction of LNG and LPG export terminals; besides development of mini refineries and petrochemical plants, as per his note.

Chabahar Port, located outside the Strait of Hormuz, is the region’s sole deep-water oceanic port, he said in the note adding that “it serves as India’s vital conduit for accessing landlocked nations like Afghanistan and Central Asian countries”.

Additionally, it offers an efficient and economical transit pathway for goods destined for Europe and serves as a pivotal stopover for vessels en route from India to the Persian Gulf and the Middle East, he noted.

At the same time, Chabahar Free Zone offers numerous benefits for foreign investors, including a 100 per cent ownership of companies by non-Iranian entities; waivers of custom duties, among others, he said.

Besides, there is exemption from customs duties for importing raw materials and industrial machinery and ore, flexible labour laws compared to mainland Iran, and enhanced banking services and easier foreign currency exchanges.

Petrochemical sector, mining, pharma, agriculture, automobile industries as well as infrastructure development, information and communication and tourism and hospitality are some of the areas that offer business opportunities in Iran, he said.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

International Port of Shahid Beheshti in Chabahar.
| Photo Credit: Getty Images

Any country having business dealings with Iran runs the risk of sanctions, the United States has said, noting that it is aware that Iran and India have signed a deal concerning the Chabahar port.

Responding to the India-Iran Chabahar agreement, “We are aware of these reports that Iran and India have signed a deal concerning the Chabahar port. I will just say, as it relates to the United States, U.S. sanctions on Iran remain in place and we’ll continue to enforce them,” State Department Deputy Spokesperson Vedant Patel told reporters at his daily news conference.

When asked whether there was a sanctions exemption “specifically” for the new agreement, the Spokesperson said “no”. “Any entity, anyone considering business deals with Iran needs to be aware of the potential risk they are opening themselves up to and the potential risk of sanctions,” Mr. Patel added.

Over the last months, the U.S. has imposed sanctions to counter Iran’s activities, taking aim at its drone and missile programs, as well as its financing of groups like Hamas.

India and Iran on May 13 signed a 10-year contract, according to which India Ports Global Ltd. (IPGL) will invest about $120 million to equip and develop the Chabahar port terminal that India has been working on thus far as a means to build a trade corridor via Iran to Afghanistan, Central Asia and on to Russia. 

Chabahar agreement can be driver of Iran-India relations: Ambassador Iraj Elahi

A memorandum of understanding for the development of the Chabahar port by India was signed in May 2015. The contract was executed on May 23, 2016, during the visit of Prime Minister Narendra Modi to Iran.

Chabahar is a deep water port located in the Sistan-Baluchistan province of Iran. During the visit of Mr. Modi to Iran in May 2016, a trilateral agreement to establish the International Transport and Transit Corridor (Chabahar Agreement) was signed by India, Iran, and Afghanistan.