Stronger India-Iran relations with Chabahar development amid US sanctions threat
Despite the looming threat of US sanctions, both Tehran and New Delhi are steadfast in their commitment to the development project of Chabahar port, recognizing the significance of the oceanic port as a key trade gateway in the region.
Located on the southeastern coast of Iran, Chabahar port is strategically positioned to serve as a major hub for shipping and trade in the region. The port provides India with a vital link to Afghanistan and Central Asia, along with offering a shorter and more cost-effective route for trade and commerce.
For Iran, Chabahar port presents an opportunity to enhance its maritime trade capabilities and boost economic growth.
The Chabahar development project has been a focal point of collaboration between India and Iran, with both countries investing significant resources to expand and modernize the port infrastructure. The construction of new terminals, roads, and railway lines at Chabahar Port is expected to enhance connectivity and facilitate smoother trade flows between India, Iran, and other countries in the region.
Despite the US threat of sanctions, India and Iran have remained committed to the development of Chabahar, recognizing its potential to strengthen economic cooperation and bolster strategic interests. The project holds strategic importance for India as it provides access to landlocked Afghanistan and Central Asia, reducing dependence on traditional trade routes through Pakistan.
Furthermore, Chabahar port offers India an alternative route for trade with Europe and Africa, diversifying its trade options and reducing reliance on congested transit routes. By investing in the development of Chabahar port, New Delhi aims to enhance its regional influence and expand its economic footprint in the strategically important region.
For Iran, the development of the port is a key component of its broader strategy to diversify its economy and reduce dependence on oil revenues. By expanding its maritime trade capabilities and attracting foreign investment through projects like Chabahar Port, Iran aims to boost economic growth and create new opportunities for trade and investment.
The US threat of sanctions on Iran has raised concerns about the future of the Chabahar port project, given the potential impact on foreign investment and trade activities in the region. However, both India and Iran remain committed to the project, viewing it as a crucial component of their respective economic development and strategic interests.
India has reiterated its support for the development of Chabahar port, highlighting the importance of the project for enhancing regional connectivity, promoting economic growth, and expanding trade opportunities. The Indian government has continued to invest in the project and explore avenues for further cooperation with Iran in order to realize the full potential of Chabahar port.
“Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions,” US State Department spokesman Vedant Patel has told reporters.
Indian authorities, however, have downplayed the tensions, with Foreign Minister Subrahmanyam Jaishankar telling reporters that New Delhi would “communicate the benefits” of the deal to the US and urge countries not to “take a narrow view of it”.
Despite the challenges posed by the US sanctions threat, India and Iran have demonstrated resilience and determination in advancing the development of Chabahar port. Both countries have reaffirmed their commitment to the project and are working together to overcome obstacles and ensure its successful implementation.
India has signed a 10-year agreement to develop and operate Iran’s strategic Chabahar port. “It [the port] serves as a vital trade artery connecting India with Afghanistan and Central Asian Countries,” India’s Shipping Minister Sarbananda Sonowal said, as New Delhi attempts to strengthen ties with an important Middle Eastern nation.
India Port Global Limited (IPGL) and the Ports and Maritime Organization (PMO) of Iran signed the long-term deal, which will allow New Delhi to upgrade and operate one terminal at Chabahar port over 10 years.
Chabahar port consists of two separate ports — Shahid Kalantari and Shahid Beheshti. India will operate a terminal in Shahid Beheshti, and as per the agreement, invest $120m into equipping it. An additional $250m loan credit facility for related projects in the port brings the contract’s value to $370m.
The two countries first started talks on the project back in 2003 but a barrage of US sanctions targeting Iran prevented any real developments. Tehran and New Delhi revived the talks again after Washington eased sanctions under the 2015 Iran nuclear deal.