India To Manage Iran’s Chabahar Port For Ten Years

May 13, 2024

India is soon expected to sign a 10-year management agreement for Chabahar Port in Iran. This development is part of India’s strategic effort to enhance connectivity with Afghanistan, Central Asia, and the broader Eurasian region. Shipping Minister Sarbananda Sonowal is scheduled to attend the signing ceremony in Iran.

About Chabahar Port

Chabahar Port is a seaport in Chabahar, Iran, on the Gulf of Oman. It serves as Iran’s closest and best access point to the Indian Ocean. For India, the port is strategic for connecting with Afghanistan and Central Asia, circumventing Pakistan. Under a bilateral agreement, India has invested in expanding and operating the port. The port’s strategic significance extends to enhancing trade ties within the region. Additionally, Chabahar Port is pivotal for the International North-South Transport Corridor (INSTC), a route designed to facilitate the movement of goods between India, Russia, Iran, and Europe.

Strategic Importance of Chabahar Port

By utilizing this port, India intends to bypass Pakistan, establishing a more direct route to Afghanistan and Central Asia. This move is also considered a strategic counteraction to the influence of Pakistan’s Gwadar port and China’s Belt and Road Initiative.

India’s Involvement and Investments

India’s engagement with Chabahar began in 2003, culminating in a commitment of $100 million in 2013 for port development. The partnership was officially formed in 2016 during Prime Minister Narendra Modi’s visit to Iran, which also included an $85 million investment for the Shahid Beheshti terminal at Chabahar. Discussions to expand India’s role in the port have continued since, particularly under the tenure of Iran’s then-president Hassan Rouhani in 2018.

Extension of the Agreement

The forthcoming 10-year agreement will supersede the current annual renewal contract, aiming to provide a stable and extended framework for India’s operational control at Chabahar. This long-term agreement underscores the significant role of the port in enhancing connectivity to the Indian Ocean Region and aiding the landlocked Central Asian countries like Kazakhstan and Uzbekistan in accessing Indian markets.

Geopolitical Context

The agreement’s timing aligns with heightened tensions in West Asia, especially following recent conflicts affecting major trade routes. This backdrop accentuates the importance of alternative regional connectivity solutions such as Chabahar. Additionally, India’s recent approval to manage Myanmar’s Sittwe Port underscores its broader strategy to assert its influence and enhance connectivity across the region. The strategic management of Chabahar Port by India marks a pivotal step in its international port management ventures, extending significant geopolitical and economic benefits to the region while bolstering its standing in global trade and politics.

Notes on International North South Transport Corridor (INSTC)

International North-South Transport Corridor (INSTC) is a multi-mode network of ship, rail, and road routes for moving freight between India, Russia, Iran, Europe, and Central Asia. Established in 2000 by an agreement between India, Russia, and Iran, the corridor spans 7,200 kilometres and aims to reduce cargo transit time and costs. It connects the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, then linking to St. Petersburg and Northern Europe. The INSTC enhances trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, and Helsinki.

Notes on Shahid Beheshti terminal

Shahid Beheshti Terminal is a key terminal within Chabahar Port in the Sistan and Baluchestan province of Iran. Operational since 2017, this terminal was part of an expansion aimed at boosting Iran’s trade connectivity, particularly with Afghanistan, Central Asia, and ultimately the connectivity across global markets. Its strategic significance is underscored by its location outside the Persian Gulf, avoiding the Strait of Hormuz—a vital transit point for global oil shipments. The port is also pivotal in the International North–South Transport Corridor (INSTC), enhancing regional ties and economic development.

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