Progress Report on India’s Chabahar Port Project

India's goal and project, the International North-South Transport Corridor (INSTC), aims to shorten the time it takes for EXIM exports to access the Central Asian markets and travel to Russia and Europe. Sonowal visited Chabahar and met Iranian Vice President Mohammad Mokhber during his three-day trip. Sonowal also handed over six mobile harbour cranes to Indian Ports Global Chabahar Free Trade Zone (IPGCFTZ) at the port. On December 24, 2018, India Ports Global Limited (IPGL) assumed control of the Chabahar port's operations through its wholly-owned subsidiary India Ports Global Chabahar Free Zone (IPGCFZ). For the Chabahar port to reach its full potential in the following years, Iran has stated that it is prepared to negotiate a long-term arrangement with India. 

RECENT EVENTS-

When he met with visiting Indian Minister of Ports, Shipping and Waterways Sarbananda Sonowal in Tehran, Iranian Minister of Roads and Urban Development Rostam Qasemi reiterated Tehran's aim. Qasemi referred to India as an "important and huge country" that might be crucial in the movement of products in the area. He also anticipated that the two nations' relations would result in investment in the Chabahar port. Mokhber specifically emphasised that the volume of investments and commercial and economic exchanges between the two countries are not commensurate with the deep and long-term political relations, reiterating that Tehran supports the implementation of agreements and commercial relations with New Delhi. He also stated that the Chabahar port would considerably improve the region's commercial interchange and passage of the International North-South Transport Corridor (INSTC). During Sonowal's visit, a Memorandum of Understanding (MoU) on the Recognition of Certificates of Competency in Unlimited Voyages was also signed to facilitate the mobility of seafarers from both nations. 

WHERE IS CHABAHAR PORT?

The region of Sistan and Baluchestan in southeast Iran is home to Chabahar port. The port has a lot of distinctive qualities that endear it to both domestic and foreign visitors. It is the only deep-sea port in Iran with direct ocean access and is situated on the edge of the Indian Ocean. It has the potential to become one of the most significant commercial centres in the area due to its physical closeness to nations like Afghanistan, Pakistan, and India, as well as its role as a crucial transit point on the developing International North-South Transport Corridor. Chabahar is one of the few regions in Iran that is not subject to American sanctions, which greatly streamlines international commerce processes.

The port of Chabahar has the potential to revolutionise trade in South and Central Asia. A greater access to the Afghan and Central Asian markets would be made possible by the projected land-based trade routes connected to the port. Afghanistan, in particular, will be greatly impacted by this expanded connection, yet the effects of the Taliban's swift capture of the nation may threaten these ambitions. Currently, most of Afghanistan's trade travels are through Pakistan, so in that regard, Chabahar port would offer an alternate economic route for the nation. As a result, Chabahar has the potential to spur enormous economic growth in Afghanistan by facilitating easier importation of commodities from other nations and increasing exportability. In addition to linking with Afghanistan and Central Asia, Chabahar will undoubtedly play a key role in Iran's eastern engagement plan, as seen by the 2,200% increase in Iran's development budget for the province that has been home to the port since 2018.

HOW DID INDIA START ITS PROJECT?

Iran's ambition to turn Chabahar into a transhipment and economic centre for the area was initially presented to India in 2013. That strategy has been in the works for a very long time. India is building the Shahid Beheshti terminal at Chabahar over five phases. When it is finished, the port will have a capacity of over 82 million metric tonnes annually. For a trial term of 18 months, followed by 10 years if the parties agree to prolong the lease, state-run Indian Ports Global Limited (IPGL) would manage the port. To equip two berths at Chabahar port for Phase I, India contributed a capital investment of $85.21 million and an annual revenue expenditure of $22.95 to the project. Near the Iran-Afghanistan border, it is building a $1.6 billion railway line from Chabahar to Zahedan.

Additionally, $20 billion in investments from private and public Indian petrochemical and fertiliser industries are planned for the Chabahar Free Trade Zone. The goods would then be loaded into trucks and trains and transported to Zahedan before continuing to Zaranj in Afghanistan. The proposal calls for offloading of Indian exports at Chabahar port. The Ring Road may then be used to deliver goods to any location in Afghanistan and beyond to the CARs. Similar to how products from Afghanistan and the CARs, whose trains are already connected to the Iranian rail network, will be moved from Zahedan to Chabahar by land before being sent to India and other nations.

INDIA'S INTEREST IN CHABAHAR PORT-

India promised to assist in developing Iran's Chabahar port and a related railway in 2015 so that India could conduct commerce with Afghanistan without Pakistan's interference. India began construction on Chabahar port last year after a brief halt. Prime Minister Narendra Modi visited Iran in May 2016 and struck a deal to spend $500 million on the port's development and related infrastructure. During Modi's visit, nearly a dozen agreements were inked between India and Iran, with the construction of the important Chabahar port serving as its centrepiece. India anticipates that after Chabahar is connected to the multimodal International North-South Transport Corridor (INSTC), it will also serve as a hub for commerce with Eurasia. According to estimates, India's commerce with Eurasia might reach $170 billion with the operationalisation of Chabahar port and INSTC ($60.6 billion in exports and $107.4 billion in imports).

Chabahar port is a strategically positioned facility that can link Central Asia and South Asia. Due to the potential of the Central Asian market, the India-led connectivity projects assist give safe and financially feasible access to the Indian Ocean area for Central Asian countries. The Chabahar port would enhance Central Asia's logistics network and encourage cooperative efforts to establish a regional, transnational transport corridor, which will increase not only Indian commerce but also worldwide trade. The Chabahar port's primary significance is that it allows India to ship products directly to Afghanistan without going via Pakistan. Chabahar port would improve India's access to Iran, a crucial entry point to the International North-South Transport Corridor, which connects India, Russia, Iran, Europe, and Central Asia by road, rail, and sea. India will benefit from Chabahar port to challenge China's influence in the Arabian Sea, which China is attempting to assure by assisting Pakistan in developing the Gwadar port. In this process, Iran would also become an ally of India militarily as a result of India developing and running the Chabahar port. If China chose to station ships in Gwadar port to demonstrate its naval might and assert its dominance in the Indian Ocean, Persian Gulf, and the Middle East, Chabahar might be exploited. The import of iron ore, sugar, and rice into India would increase significantly with the opening of the Chabahar port. Oil import costs to India would also significantly decrease. Since the Western-imposed embargo on Iran was removed, India has already doubled its purchases of Iranian petroleum. The Chabahar port ensures constructing a politically viable connection between India and Afghanistan. 

India's Minister of External Affairs, Dr Subrahmanyam Jaishankar, emphasised that the Chabahar port will be a key component of the north-south corridor and that as a result, Central Asian nations would enjoy secure, open, and unhindered access to the sea. Thus, he said he welcomes the working group from India, Iran, Afghanistan, and Uzbekistan on the shared use of the Chabahar port. 

CHALLENGES- 

Although the US has so far spared India from its restrictions regarding the construction of the Chabahar Port, the likelihood of a withdrawal in the near future might become a significant obstacle for India. Plans for creating improved commercial networks with Afghanistan and Central Asia have been significantly impacted due to the Taliban taking control of the nation, a huge issue for India in particular. The instability of the Iranian government constantly threatens Iran's long-term capacity to advance its regional and global objectives. The prospect of the Afghan Taliban seizing control and their acceptance by powerful nations like Russia, the US, and the European Union may give Pakistan more advantage in the area, severely harming Indian interests. Despite these drawbacks, India should continue to swiftly develop this port to its full potential and work to provide a convenient transit path to Afghanistan and beyond. This is crucial for meeting India's commerce and business demands and for strategic reasons. Diplomacy and discussions amongst the parties concerned can resolve any issues with this project. 

CHINA'S PRESENCE IN IRAN-

China may significantly impact the Chabahar project. Its involvement in developing and managing the Gwadar port in Pakistan has already impacted Chabahar's future. The Chabahar port in Iran and Gwadar port in Pakistan are separated by 400 km by land and 100 km by water. According to some observers, the Gwadar port might compete better than the Chabahar port in the future. In the battle to draw in business, Gwadar port is well ahead of Chabahar not just by a decade but also due to China's considerably greater investment in the port and the speed with which it is building roads and railroads from Gwadar to Kashgar as part of CPEC.

The United States has criticised the latest Iran-China agreement, increasing competition between the two countries in several other corners of the world. The accord between Iran and China is seen in New Delhi as a step toward eliminating India's usage of the Chabahar port and establishing trade ties with Afghanistan. China is reportedly looking at berthing rights at Chabahar. Still, given that it will have complete control over Gwadar for the foreseeable future, Beijing might not be in a rush to push for a position there.

CONCLUSION

The Chabahar Free Trade Zone offers the logistics industry a chance to profit while fostering burgeoning trade. India can rationalise its logistical costs in terms of money and time if it begins investing in this route for commerce. This will aid in constructing an affordable, quicker, and shorter route between the two areas. The corridor is crucial for promoting regional commerce, particularly in light of the current global crisis, in which the passage of products has become one of the key goals of all nations, including Iran, India, and Central Asian nations. This would be a very unusual combination of the transport of the train, road, and sea for passage of the product from Central Asia and Russia to India and vice versa since the Chabahar Port serves as the entrance to Central Asia, Europe, and Russia. However, Chabahar Port is positioned to become a crucial arena for the competition between China and India for supremacy in South and Central Asia. It may also be crucial for Iran's efforts to raise its profile internationally.

Considering all these afore-mentioned aspects, and the recent events, it remains to be seen how India's diplomatic actions will transpire. The project of Chabahar port is not a single country's initiative and it will be impacted by the intentions, actions and events of all the other countries those have vested interests in the region.

REFERENCES-

1.         ANI. “India, Iran Review Progress on Chabahar Port, Discuss Situation in Afghanistan.” ThePrint (blog), July 5, 2022. https://theprint.in/world/india-iran-review-progress-on-chabahar-port-discuss-situation-in-afghanistan/1026334/.

2.        August 7, India Today Web Desk New Delhi, 2017UPDATED: August 10, and 2017 14:07 Ist. “7 Reasons Why Iran’s Chabahar Port Is Crucial to India.” India Today. https://www.indiatoday.in/fyi/story/chabahar-port-iran-importance-to-india-pakistan-afghanistan-1028342-2017-08-07.

3.        “Chabahar Port and Iran’s Strategic Balancing With China and India.” Accessed https://thediplomat.com/2021/10/chabahar-port-and-irans-strategic-balancing-with-china-and-india/.

4.       “Chabahar Port: Unlocking Afghanistan’s Potential.” https://www.csis.org/chabahar-port-unlocking-afghanistans-potential.

5.        “Chabahar Port: Why It’s Important for India – IFAIR.” https://ifair.eu/2019/09/01/chabahar-port-why-its-important-for-india/.

6.       IANS. “Iran Seeks Long-Term Contract with India for Development of Chabahar Port,” August 26, 2022. https://www.business-standard.com/article/current-affairs/iran-seeks-long-term-contract-with-india-for-development-of-chabahar-port-122082600466_1.html.

7.        “India Ports Global Chabahar Free Zone – Shahid Beheshti Port Operator.” . https://www.ipgcfz.ir/.

8.       India, The Hans. “Chabahar, India’s Gateway to Central Asia,” August 2, 2022. https://www.thehansindia.com/hans/opinion/news-analysis/chabahar-indias-gateway-to-central-asia-756003.

9.       “India to Work towards Unlocking Trade Potential with Central Asia through Chabahar Port: Union Shipping Minister.” https://pib.gov.in/pib.gov.in/Pressreleaseshare.aspx?PRID=1846762.

10.     Hindustan Times. “New Delhi, Iran Review Chabahar Port Progress,” July 5, 2022. https://www.hindustantimes.com/india-news/new-delhi-iran-review-chabahar-port-progress-101657045681279.html.

11.       Qaed, Anas Al. “The Brewing Sino-Indian Conflict Over Iran’s Chabahar Port.” Gulf International Forum (blog), August 19, 2021. https://gulfif.org/the-brewing-sino-indian-conflict-over-irans-chabahar-port/.

12.      Ramachandran, Sudha. “India Doubles Down on Chabahar Gambit.” Accessed https://thediplomat.com/2019/01/india-doubles-down-on-chabahar-gambit/.

13.      The Indian Express. “Shipping Minister Sonowal Leaves for Iran; to Assess Progress of Chabahar Port,” August 18, 2022. https://indianexpress.com/article/india/shipping-minister-sonowal-iran-assess-progress-of-chabahar-port-8097785/.

14.     “Shri Sarbananda Sonowal Visits Chabahar Port in Iran to Review Work Progress.” https://pib.gov.in/pib.gov.in/Pressreleaseshare.aspx?PRID=1853334.

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(The views expressed are those of the author and do not represent views of CESCUBE.)