India, Iran and Afghanistan have signed a historic trilateral contract for the establishment of a transport and transit corridor among the three countries. The deal was signed at the visit of Prime Minister Modi where he met Iran’s President Hassan Rouhani and Afghan President Ashraf Ghani.
The central point of the deal is the construction of the Chabahar port by India in two phases. Two firms – India’s India Ports Global Private Limited (IPGPL) and Iran’s Ports and Maritime Organization (PMO) have signed the agreement for the construction of the port. The IPGPL will develop two terminals and five multi-cargo berths in Phase-1 of the Chabahar project with an initial investment of $500 million by India.
Chabahar is located in the Gulf of Oman on the border with Pakistan and is just less than hundred kilometers from the Pakistani border city of Gwadar where China is developing a port to groom Pakistan as the gateway to Central Asia. Chabahar is Iran’s closest access point to the Indian Ocean.
Why Chabahar is important for India?
The Chabahar as a transit point will be the center of a regional trade, investment and transportation hub with links from the Indian Ocean to Central Asia. For the first time, India will get access to the region through friendly nations.
(1) Chabahar and its road connectivity to Central Asia
From Chabahar port, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 km 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 Afghan cities –Herat, Kandahar, Kabul and Mazar-e-Sharif. Mazar e Sharif is near to Uzbekistan.
(2) Afghanistan will get a politically sustainable connectivity with India
The Chabahar-Zahedan-Zaranj corridor is a potential game-changer for regional connectivity, as it gives an alternative access for Afghanistan to India via the sea. This connectivity will enhance the development nature of economic engagement between the two countries.
(3) No need to depend on China sponsored Road and Belt projects to connect with Central Asia
At present, central Asia is getting lot of connectivity projects sponsored under the China sponsored Road and Belt Policy. India is not a part of the endeavor and in this context, an own initiative will help India to avoid dependence on China sponsored Central Asian connectivity.
As the West imposed ban on Iran has ended, there will be more expansion of Iran bound trade. India has increased its crude purchase from Iran ever since the end of the ban. With reducing remittance attraction and reciprocal commitment with Arab countries, Iran may get a higher role in India’s economic engagement. Hence, in future, there is higher scope and benefit for mutual trade between the two countries and the new port deal is very important as a trade facilitator.