India, Iran set to ink long-term deal on Chabahar port
India and Iran are expected to sign a long-term deal for the development of Iran’s Chabahar port by September, before the Global Maritime India Summit 2023 meets in New Delhi in October, two people familiar with the matter said.
After years of negotiations, New Delhi and Tehran are expected to sign a multi-year deal, allowing India to develop the Shahid Beheshti Terminal in Chabahar port. In 2016, India Ports Global Ltd. (IPGL) and Arya Banader of Iran signed a contract to develop the port, according to Mint news website. Spokespersons for India’s ministries of external affairs, ports, shipping, and waterways, and the Iranian Embassy in New Delhi did not respond to a query.
However, an official of India’s Ports Ministry said the contours of the long-term deal will be finalized next month, and an agreement will likely be signed in September.
Currently, India and Iran sign one-year contract extensions for developing and running the terminal at Chabahar port. However, India has been urging Tehran to commit to a longer-term pact, providing certainty for investment and development plans for the port designed by India. A long-term contract for 10 years may also provide for automatic renewal.
Negotiations on the long-term contract were earlier held up due to disagreements over the arbitration clause in the deal. Iran was earlier uncomfortable with clauses on international arbitration, given constitutional restrictions on taking disputes to foreign courts. Differences of opinion over other clauses, such as a guarantee of minimum traffic sought by Iran, will also be resolved, paving the way for fast-tracking infrastructure development at the port to ensure bringing shipping traffic to this strategic location. In 2016, India committed $85 million for the development of the port, along with a $150 million line of credit. As of 2023, India has supplied six gantry cranes to the tune of $25 million for the development of the port. However, Iran has voiced dissatisfaction with India’s efforts in the past. The country’s former ambassador to India, Ali Chegeni, termed the development work on Chabahar “very slow”.
Chabahar, located in southeastern Iran, was envisioned as a gateway for India to access Central Asian markets. The project’s roots date back to 2003, when both nations agreed to its development during then-president Mohammad Khatami’s visit to India. However, the initiative faced obstacles due to Western sanctions on Iran. In 2013, India pledged $100 million to develop the port, but matters progressed after the 2015 nuclear deal was struck between Iran and world powers over its nuclear program.