Iran has offered India management rights for Phase 1 of Chabahar Port launched by President Hassan Rouhani on Sunday in the presence of India’s Minister of State (Shipping) Pon Radhakrishnan a day after Indian Foreign Minister Sushma Swaraj visited Tehran to push New Delhi’s agenda.
Vying for a foothold in the region barely 100 km from Pakistan’s Gwadar Port built and managed by China, India has allotted $235 million for expansion of Phase 2 of the strategically located Chabahar Port besides another $500 million for the development of Chabahar Port Complex, including a special economic zone.
Earlier, India sent its first wheat consignment to Afghanistan through Chabahar Port.
On Oct. 29, India, Iran and Afghanistan signed a trilateral pact in 2016 for the operation of Chabahar. The October shipment is a part of commitment made by India to supply 1.1 million tons of wheat for the people of Afghanistan on grant basis. Six more wheat shipments will be sent to Afghanistan over the next few months.
The opening ceremony at Chabahar at the confluence of Oman Sea and the Indian Ocean was attended by 60 representatives from 17 countries. The project, due to its strategic location, links the region to Central Asia and the Commonwealth of Independent States.
Tehran has proposed that New Delhi manage Phase 1 of the Chabahar built by Iran. The offer involves management rights for two years, which could be renewed by another decade.
Japan is also partnering with India for the expansion of Chabahar Port Complex.
The operationalization of Chabahar will also boost India’s efforts to connect with resource-rich Central Asia and Russia as an alternate, reliable and robust connectivity for Afghanistan, following Pakistan’s refusal to allow India access via its territory to Afghanistan.
It will open up new opportunities for trade and transit from and to Afghanistan and enhance economic ties between the three countries and the wider region.
While the US is hardening its position over Iran and has decertified the 2015 nuclear deal between Tehran and world powers, Chabahar Port is outside the purview of American sanctions.
India’s allotment of $235 million for Chabahar’s expansion is divided into two parts: a line of credit worth $150 million from the EXIM Bank for development/expansion of the port in addition to $85 million for supply of equipment to develop two berths in the port.
A Special Purpose Vehicle has been created by the Indian Shipping Ministry for development of Phase 2 of the Iranian port. India has been given the rights to operate two berths and few terminals in Phase 2 of the port.
India also plans to construct a railroad between Chabahar and the Iranian city of Zahedan to connect the port to the Iranian rail network. The port, through this rail network, could also be linked with the International North-South Transport Corridor to connect India with Russia and beyond.
Chabahar is planned to be linked with Delaram-Zaranj Road via rail through Zahedan. A road already connects the Iran-Afghan border point to Chabahar.
Two Indian fertilizer firms are looking to establish a urea and ammonia plant in the Chabahar Free Trade Zone. Additionally, NALCO and Iran’s Iranian Mines and Mining Industries Development and Renovation Organization have already held discussions to establish an aluminum smelter plant in the free trade zone.