Indian Prime Minister Narendra Modi and Iranian President Hassan Rouhani in May 2016 signed a series of twelve agreements in Tehran.
The most important of these 12 agreements is the trilateral transit agreement between India, Iran and Afghanistan. In the deal, India offered to develop the Port of Chabahar in order to allow Indian goods to be exported to Iran, with the possibility of onward connections to Afghanistan and Central Asia.
The deal was signed at the recent visit of India’s Prime Minister Narendra Modi visit to Iran. It was the maiden visit by an Indian Prime Minister after lifting of sanctions on Iran in the aftermath of the Joint Comprehensive Plan of Action (JCPA).
Deal’s focal point
• The bilateral agreement between India and Iran gives India the right to develop two berths of the Chabahar port as agreed in 2015.
• Two firms: India’s India Ports Global Private Limited (IPGPL) and Iran’s Ports and Maritime Organization (PMO) have signed the agreement for the construction of the port. IPGPL will invest 85 million US dollars in developing two container berths with a length of 640 metres and three multi-cargo berths.
• The contract is for 10 years and extendable. It will take 18 months to complete phase one of the port construction.
• State run railway body IRCON International will set up a railway line at Chabahar to move goods right up to Afghanistan. The 500-km rail link between Chabahar and Zahedan will link Delhi to the rest of Iran's railway network.
• India has also offered to supply 400 million US dollar worth of steel towards the construction of a rail link between Chahbahar and Zahedan.
Where is Chabahar Port?
• Chabahar Port is a seaport in Chahbahar in southeastern Iran.
• Its location lies in the Gulf of Oman.
• It is the only Iranian port with direct access to the Indian Ocean.
• Being close to Afghanistan and the Central Asian countries of Turkmenistan, Uzbekistan and others, the port has also been called as the Golden Gate to these land-locked countries.
• The port was partially built by India in the 1990s to provide access to Afghanistan and Central Asia, bypassing Pakistan under the Ashgabat Agreement.
Significance of Chabahar Port
• The port will provide an alternative access to trade with Afghanistan bypassing Pakistan.
• Reduced transportation costs will allow India to import crude oil, urea and dry fruits at lower prices.
• Besides, land-locked country Afghanistan’s dependence on Pakistan for sea-access will be significantly reduced. It will ultimately lower Pakistan’s strategic hold on Afghanistan.
• It will provide India access to the Middle East and Gulf countries increasing trade and ties.
• It is the nearest port to India on the Iranian coast. It will provide India access to the resources and markets of Afghanistan and Central Asia.
Why the deal is important for India?
• As a transit point, the Chabahar Port will be the centre of a regional trade, investment and transportation hub. For the first time, India will get access to the region through friendly nations. The port will make way for India to bypass Pakistan in transporting goods to Afghanistan using a sea-land route.
• From the port, the existing Iranian road network can link up to Zaranj in Afghanistan. The Zaranj-Delaram road constructed by India in 2009 can easily give access to Afghanistan's Garland highway. It will set up road access to four major Afghan cities: Herat, Kandahar, Kabul and Mazar-e-Sharif.
• The Chabahar-Zahedan-Zaranj corridor is a potential game-changer for regional connectivity because it provides an alternative access for Afghanistan to India via the sea. This connectivity will significantly boost the development nature of economic engagement between the two countries.
• On the other hand, China sponsored Road and Belt Policy is supporting a lot of connectivity projects in China. At this point of time, India’s own initiative will help the country to avoid dependence on China sponsored Central Asian connectivity.
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