Charting New Waters: India’s Bold Move with Chabahar Port

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For India, the first-ever contract for managing a foreign port is a significant development, even as several Indian companies have been engaged in developing ports in Oman, Myanmar, Israel, and elsewhere. And this 10-year-term lease agreement further strengthens the bilateral ties between India and Iran while bolstering confidence and boosting trust of trading communities from the region, writes former diplomat and columnist Ambassador Anil Trigunayat.

Chabahar port has mostly remained in the news virtually since the inception of this strategic connectivity project between India and Iran. Due to the unending saga of cross-border terrorism by Pakistan against India, the ensuing uncertainty, and the need to connect with Afghanistan and Central Asia — the two vital partners, New Delhi embarked on developing this deep-sea port, which would be mutually beneficial.

Eventually, this was to feed into a major over two-decades-old connectivity corridor, ‘INSTC’ (International North-South Transport Corridor), with Russia, Iran, and thirteen other countries in the region and beyond. The love-hate tango between the US and Iran has often caused problems, especially on the smooth progress of the project, due to the fear of CAATSA and other secondary sanctions feared by many Indian firms, which had larger exposure to the West.

Ironically, the Russia-Ukraine war has refocused attention and accelerated the usage and further implementation of the Chabahar project while integrating it with the INSTC.

Progress of the Project

Both New Delhi and Tehran have shown requisite commitment to advancing the Chabahar project since 2003, which eventually picked up in 2012. But during the important and successful visit of Dr S. Jaishankar, the Indian External Affairs Minister, to Tehran in January this year, in the backdrop of the Houthi challenge in the Red Sea, he met Iranian Minister of Roads and Port Development Mehrdad Bazrpash. They discussed long-term cooperation, development, and management of Chabahar port and other connectivity projects, including the smooth functionality of the 7200 Km long multimodal INSTC corridor.

During his call on President Ebrahim Raisi, the security of the shipping lanes as well as the speedier implementation of the Chabahar Port development plans were underscored. 

The New Agreement 

In continuation of this and the previous visit of the Indian Minister of Ports and Shipping and in less than six months of framework agreement discussions that Dr Jaishankar had, the new contract was signed on May 13 by India Ports Global Ltd (IPGL) and Iran’s Port & Maritime Organisation (PMO). This agreement was signed in the presence of India’s Ports, Shipping, and Waterways Minister Sarbananda Sonowal.

This arrangement was to be for ten years and would replace the management of the Shahid Beheshti terminal, which was undertaken on a yearly basis by India Ports Global Limited (IPGL).

“The long-term bilateral contract on Chabahar Port Operation was signed between Indian Ports Global Limited (IPGL) of India and the Port & Maritime Organisation (PMO) of Iran, enabling operation of Shahid-Beheshti in Chabahar Port Development Project for a period of 10 years” and this ten-year-long lease agreement further strengthens the bilateral ties between India and Iran while bolstering confidence and boosting trust of trading communities from the whole region.

Accordingly, IPGL will inject approximately $120 million into the port’s development, alongside an additional $250 million in financing, making the contract’s total value reach $370 million. In its budgetary provisions for 2024-25, the Ministry of External Affairs has allocated ₹100 crore as well. 

For India, the first-ever contract for managing a foreign port is a significant development, even as several Indian companies have been engaged in developing ports in Oman, Myanmar, Israel, and elsewhere. Chabahar’s strategic location and proximity to, obviates the distrusted and disrupted connectivity through Pakistan, be it Karachi or Gwadar. It helps in providing assistance directly to landlocked Afghanistan. Last year, India supplied 20000 tonnes of wheat to Afghanistan via Chabahar port, when Islamabad started playing truant even for the passage of humanitarian assistance to the struggling population of Afghanistan.

Even Iran has received some assistance. It also provides another outlet for energy-rich regions by obviating the exposure to the other gulf choke points like the Strait of Hormuz and the Red Sea, especially with regard to energy supplies. Likewise, it helps render project and infrastructural development in Afghanistan and Central Asia.

No doubt the US has seen this news of long-term arrangement in the light of its degrading relationship with Iran, which, apart from Russia, remains one of the most sanctioned countries. Hence, the threat of secondary sanctions remains real even as Chabahar itself has mostly remained out of the purview of US sanctions for providing relief supplies to a beleaguered Afghanistan. But anything ensuring a long-term relationship with their rivals does not meet with a simple US displeasure. It has to be accompanied by threats. This time was also no exception. 

The US Deputy Spokesperson implied threats for the Indian companies while underlining that “We are aware of these reports that Iran and India have signed a deal concerning the Chabahar Port, I would let the government of India speak to its own foreign policy goals, vis-a-vis the Chabahar Port as well as its own bilateral relationship with Iran.” India’s External Affairs Minister, Dr. S. Jaishankar, reminded them that the US should not take a narrow view of it and if you look at the US’ own attitude towards the port in Chabahar, the US has been appreciative of the fact that Chabahar has a larger relevance — and we will work at it.

Despite the rhetoric, hopefully, the Americans, in keeping with the Global Comprehensive Strategic Partnership with India, will appreciate the intent and outcome for a more significant cause in which they are invested as well, especially in Central Asia and hopefully in the welfare of Afghan people who deserve a better deal after what they have gone through in the last two decades and even more as result of USA’s Taliban to Taliban dance. 

Ironically, both of India’s major connectivity initiatives are being held up due to the US role one way or the other. On the one hand, the INSTC is restricted due to the heaviest of sanctions by the USA on Iran and Russia, in turn impacting its strategic partner India and some Central Asian countries where it wants to get embedded. On the other major IMEEC (India Middle East Europe Economic Corridor) connectivity project in which the USA is a key player and its ambivalent role in the West Asian crisis has also extended the difficulty levels for its implementation, again impacting India’s connectivity ambitions.

A moot yet searching question is — what kind of a Global Comprehensive Strategic Partnership is it?  Let us hope they will make a realistic assessment of the ground situation and make appropriate choices while India is going ahead. In any case, we need to find ways to deal with such eventualities either through SPVs (Special Purpose Vehicles) or any other combination that could be sanction-immune.

Ambassador Anil Trigunayat
Ambassador Anil Trigunayat
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Anil Trigunayat is a former Indian Ambassador to Jordan, Libya and Malta and has served in Russia twice.

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