India, Iran sign long-term port deal

New Delhi and Tehran have signed a ten-year deal allowing New Delhi to operate Chabahar on the country’s southeastern coast along the Gulf of Oman. The deal affords India seamless access to Afghanistan and Central Asia, and to Russia, as Chabahar, Iran’s first deepwater port, was conceived as a strategic hub for the International North-South Transport Corridor (INSTC), developed by New Delhi, Tehran and Moscow as an alternative shipping route to the Gulf of Aden-Suez Canal route. 

The Indian Minister of Ports Sarbananda Sonowal was in Tehran on Monday to seal the deal with Iranian Minister of Roads and Urban Development Mehrdad Bazrpash.

According to the contract, state-run India Global Ports Limited (IGPL) will assume operations of general cargo and container terminals at one of Chabahar’s two facilities, the Shahid Beheshti port. This one lies to the west of Iran’s border with Pakistan and not far from that country’s port of Gwadar, used as a hub in China’s Belt and Road Initiative. 

By inking the long-term deal, which comes after three years of negotiations, New Delhi effectively counterbalances China’s presence in the region, reports suggest. It has also offered Tehran a rupee-denominated credit line equivalent to $250 million for infrastructure projects related to the port’s development. 

According to Sonowal, the long-term agreement is going to “clear the pathway for bigger investments to be made in the port.” Indian media has reported that IGPL will invest up to $120 million in equipping the facility. 

“The expectation is that we will see more investments and connectivity linkages from that part of the port. It’s definitely heading in a good direction,” Indian Foreign Minister Subrahmanyam Jaishankar said on Monday about the development.

New Delhi has been heavily invested in Chabahar Port since 2016, when Prime Minister Narendra Modi visited Iran. The first phase of the deepwater port was officially launched by then-President Hassan Rouhani in 2017. Progress on it has been delayed due to various factors, mainly US sanctions against Tehran.

Chabahar is also seen as a gateway for unlocking India’s trade potential with Central Asia, Russia and European countries. The port is a part of the INSTC multi-modal, north-south trade route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and Azerbaijan, and on to northern Europe. 

This trade corridor originates in Mumbai and passes through Bandar Abbas, Bandar-e-Anzali, and Chabahar, then crosses the Caspian Sea to reach Astrakhan in southern Russia, linking Moscow and St Petersburg via rail and road connections. Data shows that the INSTC is projected to reduce transit times by 40%, shortening average trips from 45-60 days to 25-30 days. It is also likely to decrease freight costs by 30% and to emerge as a commercially viable alternative to the Suez Canal trade link between Asia and Europe.

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