External Affairs

In a Big Push for Regional Integration, India and Iran Ink Chabahar Port Deal

Tehran: Prime Minister Narendra Modi shakes hands with Iranian President Hassan Rouhan during a joint press conference after their meeting at the Saadabad Palace in Tehran, Iran, Monday. Credit: PTI/Shahbaz Khan

Tehran: Prime Minister Narendra Modi shakes hands with Iranian President Hassan Rouhani during a joint press conference after their meeting at the Saadabad Palace in Tehran on Monday. Credit: PTI/Shahbaz Khan

Tehran: Prime Minister Narendra Modi was given a ceremonial welcome as he met Iranian President Hassan Rouhani for talks to deepen bilateral trade, investment and energy ties today. Modi arrived in Tehran on Sunday on a two-day visit seeking to further cement Indo-Iranian ties and explore avenues to bolster trade in a big way in the wake of sanctions against Iran being lifted.

Modi, the first Indian prime minister to visit Iran on a bilateral visit in 15 years, was received by Rouhani on the forecourts of Saadabad Palace – the seat of the executive in Iran. Military bands played the national anthems of the two countries after which Modi inspected the guard of honour.

The two leaders then had a 30-minute restricted meeting to discuss bilateral issues of strategic and business importance. Delegation-level talks followed, leading to the signing of agreements on the development of the Chabahar port on the southern coast of Iran, the setting up of an aluminium smelter plant and a rail line.

Tehran : Prime Minister Narendra Modi with Iranian President Hassan Rouhani reviewing the guard of honour during the welcome ceremony at the Saadabad Palace in Tehran, Iran, Monday. Credit: PTI/Shahbaz Khan

Tehran : Prime Minister Narendra Modi with Iranian President Hassan Rouhani reviewing the guard of honour during the welcome ceremony at the Saadabad Palace in Tehran on Monday. Credit: PTI/Shahbaz Khan

Increased regional access

The inking of a commercial contract to build and run the strategic port of Chabahar will help India gain a foothold in Iran and gain access to Afghanistan, Russia and Europe, thus circumventing Pakistan, said Nitin Gadkari, the minister for road transport, highways and shipping. “The distance between Kandla and the Chabahar port is less than the distance between New Delhi and Mumbai, and so what this agreement does is to enable quick movement of goods first to Iran and then onwards to Afghanistan and Russia through a new rail and road link,” he explained. “Over 1 lakh crore rupees investment can happen in the Chabahar free trade zone.”

India is blocked from land access to Afghanistan and through it to the central Asian countries because of opposition from Pakistan, which sees India’s expansive diplomacy in the region as a threat.

Iran, Gadkari said, has cheap natural gas and power that Indian firms are keen to tap in order to build a 0.5 million tonne aluminium smelter plant as well as urea manufacturing units. “We spend 45,000 crore rupees annually on urea subsidy and if we can manufacture it in the Chabahar free trade zone and move it through the port to Kandla and onward to the hinterland, we can save that amount,” he said.

Gadkari said state-run NALCO will set up the aluminium smelter, while private and cooperative fertiliser firms are keen to build urea plants, provided they get gas at less than $2 per mmBtu. Railway public sector undertaking IRCON will build a rail line at Chabahar to move goods right up to Afghanistan, he added.

Gadkari went on to say that India Ports Global Pvt, a joint venture of the Jawaharlal Nehru Port Trust and the Kandla Port Trust, will invest $85 million in developing two container berths, and Exim Bank will provide a credit line of another $150 million. The Indian consortium has signed the port pact with Aria Banader Iranian. “The contract is for 10 years and can be extended. We will take 18 months to complete phase one of the construction,” he said, adding that first two years of the contract are a grace period where India doesn’t have to guarantee any cargo. From the third year, India will guarantee 30,000 TEUs of cargo at the Chabahar port, which will go up to 2,50,000 TEUs by the tenth year.

An initial pact to build the Chabahar port was first inked during the Atal Bihari Vajpayee government in 2003, but the deal slipped through during subsequent years. It has been aggressively pushed in the last one year, leading to the signing of the agreement for phase-1 today, Gadkari said.

“This is a historic event which will herald in a new era of development. We can now go to Afghanistan and further to Russia and Europe without going through Pakistan,” he added.

The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland Highway, setting up road access to four major cities in Afghanistan – Herat, Kandahar, Kabul and Mazar-e-Sharif. India is also reported to finance another road network inside Afghanistan to enable Iran to access as far as Tajikistan through a shorter route.

Chabahar is about 100 km from the Chinese-run Gwadar port in Pakistan, part of China’s $46 billion plan to develop the China-Pakistan Economic Corridor that is aimed at opening new trade and transport routes across Asia.

India, Afghanistan and Iran separately signed an agreement to set up a trade and transport corridor, with Chabahar as the hub. Road and rail links are being built so that land-locked Afghanistan can get access to the Iranian port as an alternative to the Pakistani port of Karachi.

 (PTI)