Chabahar Port Agreement
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- Recently, India and Iran signed a 10-year contract for operating the Chabahar port in Iran.
- This long-term agreement was signed between Indian Ports Global Ltd. (IPGL) and Port and Maritime Organisation (PMO) of Iran, enabling operation of the Shahid-Beheshti terminal.
About Chabahar Port
- It is Iran’s only oceanic port situated in Sistan and Baluchistan Province.
- It lies in the Gulf of Oman.
- There are 2 main ports in Chabahar –
- Shahid Kalantari port
- Shahid Beheshti port
- Iran offered India Shahid Beheshti port for development of the project.
About Chabahar Agreement
- India signed MoU for the development of the Chabahar port in May 2015.
- India, Iran, and Afghanistan signed a trilateral agreement to establish the International Transport and Transit Corridor, also known as the Chabahar Agreement in May 2016.
- Main Aim – To improve transportation and trade connectivity between the three countries – India, Iran and Afghanistan by utilising the port of Chabahar.
- It aims to supersede the initial contract, spanning a duration of 10 years with automatic renewal provisions.
Why Chabahar Port
- Chabahar Port offers an alternative route that bypasses Pakistan, reducing India’s reliance on its neighbour for trade with Afghanistan and beyond.
- It will boost India’s access to Iran through International North-South Transport Corridor(INSTC) that has sea, rail and road routes between India, Iran, Russia, Central Asia and Europe.
- Apart from Iran and Afghanistan, it will allow India to diversify its trading routes and gain enhanced access to the markets of Russia, Eurasia and Europe.
- INSTC route is expected to save 30% in cost and 40% in transportation time, ensuring quick turnaround at a competitive cost.
- Many Central Asian Nations now by utilising Chabahar connect to the Indian Ocean Region and enters the Indian market.
- During Covid-19 pandemic, 2.5 million tonnes of wheat and 2,000 tonnes of pulses have been trans-shipped from India to Afghanistan via Chabahar port.
- In 2021, India provided 40,000 liters of the eco-friendly pesticide malathion to Iran to combat locust attacks through this port.
Challenges for the Agreement
- US warned India of “potential risk of sanctions” after it signed a long-term agreement for the development of Chabahar Port of Iran. Earlier in 2018, the US granted India an exemption from specific sanctions in order to support the advancement of the Chabahar port and the building of a railway link to connect it with Afghanistan.
- Houthi rebels can disrupt sea lanes of communication, which will affect traffic at the Chabahar port as well.
- US exit from Afghanistan and the return of the Taliban there, have created an unstable situation there which has negatively influenced trade relations with India.
- Unstable relations between Iran and some of its neighbours, such as Israel, as well as the unstable political situations in neighbouring countries like Afghanistan and Pakistan, are also taking a toll on India’s economic interests at Chabahar Port.
- Competition from several transport routes, like the India-Middle East-Europe Economic Corridor (IMEC) poses a challenge to Chahbahar as both of these corridors link Asia with Eastern Europe.
- Chinese investment in Chabahar can undermine India’s interest in Iran.
- The Project seeks to improve infrastructure such as ports, roads, and railways, requiring significant investment, time, and expertise. Any delays or inefficiencies could impede its progress.
