Revision as of 10:34, 5 December 2017

Chabahar port: Some factual information; Graphic courtesy: The Times of India, May 25 2016

Indo-Iran port deal

History

The Times of India

India to sign port deal with Iran, ignoring US warning against haste

May 5, 2015

India and Iran agreed in 2003 to develop a port at Chabahar on the Gulf of Oman, near Iran's border with Pakistan, but the venture has made little progress because of western sanctions on Iran.

India and Iran agreed in 2003 to develop a port at Chabahar on the Gulf of Oman, near Iran's border with Pakistan, but the venture has made little progress because of western sanctions on Iran.

Now, spurred on by Chinese President Xi Jinping's signing of energy and infrastructure agreements with Pakistan worth $46 billion, Modi wants to swiftly sign trade deals with Iran and other Gulf countries.

Encouraged by the prospect of a deal between world powers and Tehran by June 30, 2015 on Iran's nuclear programme, after which sanctions could be eased, India recently sent a delegation to Iran to scout for trade, energy and infrastructure deals.

Iran has also proposed a free-trade agreement with India, a trade ministry source said. Rupee-denominated trade with Iran, started in 2012 because of complications arising from sanctions, has almost doubled Indian exports to Tehran in the past two years to $4 billion.

Now Indian exporters want to build on that, using a free-trade zone being developed near Chabahar to export more to the Commonwealth of Independent States, made up of former Soviet Republics, said Mumbai-based Khalid Khan, regional head of the Federation of Indian Export Organisations.

"It will be Modi's gift to Iran and Indian exporters," he said of the port project.

Bypassing Pakistan

India wants to build the port as it would cut transport costs and freight time to Central Asia and the Gulf by about a third.

The port is also central to India's efforts to circumvent Pakistan and open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.

India has already spent about $100 million to construct a 220-km (140-mile) road in western Afghanistan to link up with Chabahar port.

Chabahar is just along the coast from Gwadar port in Pakistan that is being developed with China's help, said Robin Mills, head of consulting at Dubai-based Manaar Energy. "So there is a strategic element for the Indian side".

2016

India had to stave off China to ink port agreement with Iran

The Times of India, May 25 2016

Sachin Parashar

India's commercial contract with Iran for development of Chabahar port has come not a moment too soon for the government.Notwithstanding its presence at Pakistan's Gwadar, where it has developed and acquired operational control of a port, China has also looked to invest in the development of Chabahar port.

Only in April 2016, a Chinese consortium visited the Chabahar free trade zone and expressed interest in developing the port and also building an industrial town there. The head of the Chinese consortium which visited Chabahar was quoted as having said that Chinese companies were eager to invest in the strategically located port and free trade zone.

This followed the visit by Chinese President Xi Jinping to Iran in January 2016 when the two countries mentioned in their joint statement development of ports as one of the areas where they could have tangible cooperation.

The inter-governmental MoU signed by union minister Nitin Gadkari in 2015 for developing Chabahar was also seen as India's response to the interest shown in the Iranian port by China Harbour Engineering Company which runs the Gwadar port in Pakistan.

India had to move quickly in the past few months not just to sign the contract between IPGPL (India Ports Global Private Limited) and Iranian firm Arya Banader but also a confirmation statement between EXIM Bank and Central Bank of Iran confirming availability of credit up to Rs 3000 crore for the import of steel rails and implementation of India's Chabahar port commitment. According to Indian offici als, the contract envisages India's investment and participation in the first phase of Chabahar port which involves development of two terminals and five berths with multi-cargo capacity . The contract also comes with specific timelines for its implementation.

India's desperation to seal the contract, in fact, also stemmed from Iran's own conduct in the past few months with Tehran seemingly playing both ends for a while. Even after India had signed the MoU for developing Chabahar last year, Iran's ambassador to India Gholamreza Ansari had warned that New Delhi needed to look at benefiting from business opportunities in Iran, once the international sanctions on Tehran were lifted, and not waste time in “cheap negotiations“.

The Sistan and Baluchestan governor, Ali Osat Hashemi, hosted another Chinese delegation at Chabahar in October 2015 and announced that Iran would be glad to work with Beijing and provide it with lucrative business opportunities as it had always stood by Iran. He had said he would discuss investment possibilities in Chabahar with both China and Pakistan.

Any sizeable presence of the Chinese in Chabahar will be resented by India even as Beijing's presence grows elsewhere in Iran. Unlike India, Iran has welcomed China's Maritime Silk Road initiative and, compared to its annual trade volume of $9 billion with India, Iran's trade with China stands at $52 billion. According to many in the government, Chabahar is also important for India to break free from is often described as its strategic encirclement by China which not only controls the Gwadar port but has also restored its presence in Colombo and Hambantota in Sri Lanka.

Why Chabahar port is important for India

PM Modi in Iran: Why Chabahar port is important for India, 22 May, 2016: The Times of India

1) Chabahar port will help India bypass Pakistan Chabahar is a port in south east Iran that will enable India to bypass Pakistan and open up a route to land-locked Afghanistan with which New Delhi has close security ties and economic interests.

2) The port will cut transport costs/time for Indian goods by a third.

3) Iran plans to turn the Chabahar port into a transit hub for immediate access to markets in the northern part of the Indian Ocean and in Central Asia.

4) India is one of a handful of countries that continued trade links with Iran despite it being isolated by Western countries against its disputed nuclear programme. New Delhi is Tehran's second-biggest oil client after Beijing.

5) Chabahar port, located in the Sistan-Baluchistan Province on Iran's southern coast, is of great strategic utility for India. It lies outside the Persian Gulf and is easily accessed from India's western coast.

6) It will set up India's road access to four cities in Afghanistan. From Chabahar, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 kms from the port. 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.

7) The port project will be the first overseas venture for an Indian state-owned port. India and Iran had in 2003 agreed to develop Chabahar on the Gulf of Oman outside the Strait of Hormuz, near Iran's border with Pakistan.

8) The project moved slowly because of western sanctions against Iran. The sanctions were lifted in January and since then, India has been pushing for conclusion of an agreement.

9) About a fifth of the oil consumed worldwide each day passes through the Strait, a shipping choke point that separates the Persian Gulf from the Gulf of Oman and Indian Ocean.

10) Indian investment in phase-1 will be in excess of $200 million, including $150 million line of credit from Exim Bank, an agreement for which would also be signed during the visit.