Iran drops India from Chabahar rail project after China finalises a $400 billion strategic partnership deal with Iran. As per a report published in The Hindu, Iran has decided to proceed with the construction of a rail line from Chabahar port to Zahedan, along the border with Afghanistan, on its own. The Government of Iran has cited delays from the Indian Government in funding and starting the project.
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Chabahar Rail Project
In the year 2016, Prime Minister Modi's visited Iran for a bilateral summit between India and Iran. It was for the first time since 15 years that an Indian Prime Minister visited Iran. The Governments of Iran and India signed a series of agreements. The agreement gave rights to India to develop and operate 2 terminals and 5 berths with the multipurpose cargo handling capacities for a period of 10 years to construct and alternative trade route between Central Asia and Afghanistan.
A trilateral agreement was signed between India, Iran and Afghanistan. Prime Minister Modi, Iranian President Dr Hassan Rouhani and the President of Afghanistan inked an agreement for Trilateral Transport and Transit Corridor. Under this agreement, India's state-owned IRCON (Indian Railways Construction Ltd) agreed to provide assistance to the railway line project and promised to finance the project worth $1.6 billion.
Details of the Project
Chabahar is located 72 km west of Gwadar Port of Pakistan. Thus, the port is of strategic importance to India. The project was expected to be completed by March 2022. For this, the Iranian Government was to sanction $400 million from the Iranian National Development Fund.
Last week, Iranian Transport Minister Mohammad Eslami inaugurated the track-laying process for the 628 km Chabahar-Zahedan line to Zaranj across the border in Afghanistan.
Strategic Partnership between China and Iran
Iran and China are close to finalizing a 25-year strategic partnership. As per an 18-page document on 'Comprehensive Plan for Cooperation between Iran and China', both the countries will invest in infrastructure; manufacturing and upgrading energy and transport facilities; refurbishing ports, refineries and other installations; and will commit Iranian oil and gas supplies to China during that period.
Also, Iran has proposed a tie-up between the Chinese-run Pakistani port at Gwadar and Chabahar. It has also offered interests to China in the Bandar-e-Jask port which is 350 km away from Chabahar and its duty-free zone.
How will it impact India?
Iran dropped India from the project at a time when the former is seeking to finalise a 25-year economic and security partnership with China worth $400 billion. In return of this deal, Iran will give heavy discounts to China on the supply of Iranian oil regularly for the next 25 years, in addition to deeper military cooperation. This blow came at a time after India's standoff with China and is expected to further worsen the relationship.
Why India delayed the project?
Iranian Foreign Minister Mohammad Javad Zarif on his three-day visit to India in January this year laid stress on completing the Chabahar-Zahedan rail network. However, India never began the work fearing US sanctions. Earlier, the U.S. provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to worries they could be targeted by the U.S., as per the officials. Also, after US Sanctions, India has already “zeroed out” its oil imports from Iran.
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