Iran Economy NewsIndia accelerates Iranian port project after U.S.-Iran thaw

India accelerates Iranian port project after U.S.-Iran thaw


Reuters: India is sending a team to Iran to speed up work on a port that will provide access to resource-rich Central Asia and Afghanistan, officials said, moving quickly to take advantage of a thaw in Iran’s relations with the West.
By Sanjeev Miglani

NEW DELHI (Reuters) – – India is sending a team to Iran to speed up work on a port that will provide access to resource-rich Central Asia and Afghanistan, officials said, moving quickly to take advantage of a thaw in Iran’s relations with the West.

The port of Chabahar in southeast Iran is central to India’s efforts to circumvent Pakistan and open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.

The port, which India is partly financing, will also be another gateway to Iran itself for Indian commerce.

Work has been slow on expanding berthing facilities and container terminals, partly because India has been reluctant to press ahead too enthusiastically for fear of upsetting the United States, keen to isolate Iran over its nuclear ambitions.

On Monday, just after Iran sealed an initial accord with six powers including the United States to limit its nuclear program in exchange for the easing of some sanctions, Indian Foreign Secretary Sujatha Singh met Iranian Deputy Foreign Minister Ebrahim Rahimpour to discuss economic opportunities.

The Iranian official was in New Delhi on a pre-arranged visit but as news of the deal in Geneva broke, the talks turned to ways to fast-track the long-running port project.

“For us, Chabahar is a strategic necessity, otherwise we don’t have access to Afghanistan and central Asia,” a foreign ministry official said.

Pakistan, loath to see growing Indian influence in Afghanistan, does not allow India to send goods through its territory to Afghanistan and has only recently begun to allow a trickle of Afghan exports to cross through to India.

The Indian ministry official said while India’s involvement in the port development was not strictly under the international sanctions that had been imposed on Iran, any improvement in Iran’s ties with the West would build confidence in the project.

“The Geneva agreement certainly opens up the space to pursue this at greater pace.”

India has committed $100 million to upgrading facilities at the port after spending $100 million on building a 220-km (140-mile) road in a dangerous stretch of western Afghanistan to link up with Chabahar.

The port on the Gulf of Oman is 72 km (44 mile) from Pakistan’s deep-water Gwadar port, which China has built as part of a plan to open up an energy and trade corridor from the Gulf, across Pakistan to western China.


Both India and China have been trying to secure energy supplies for their growing economies, investing in projects abroad and offering engineering and financial assistance in a race that extends from Africa to Latin America.

Chabahar is the first foreign port that India is directly involved in developing. India is struggling to modernize its own congested ports. China, on the other hand has helped build a string of ports in foreign countries, including Gwadar and Sri Lanka’s Hambantota port.

“Chabahar is going to see more Indian attention over the next few months,” said Shashank Joshi, who specializes in the Middle East and South Asia at the London-based Royal United Services Institute.

“India was caught by surprise over the nuclear deal, and it does not want to be caught sleeping if a U.S.-Iran thaw develops quickly.”

A team from the state-run Jawaharlal Nehru Port Trust which manages India’s largest container port near Mumbai and the Kandla Port Trust will travel to Chabahar in the next few weeks and stay a month for a technical and commercial assessment.

“We have an opportunity here, the port has a strategic location,” said an official at the Jawaharlal Nehru Port Trust.

“But we also need to see the viability. There are not many ships going there at the moment. We have to make projections about traffic, revenue.”

The port has the capacity to handle 2.5 million tonnes (1.1023 ton) a year, which Iran would like to increase to 12.5 million tonnes. Iran has made the area adjacent to Chabahar town a free trade zone in the hope of spurring growth in its poor southeast.

The Indian operators plan to set up a special mechanism to finance part of the port’s infrastructure and they want the Iranians to give it long-term rights to operate it.

Iran hasn’t given any indication about that yet and, according to one Indian official, it wants more Indian finance to develop the port as well as rail and road links.

“It seems the strategic ramifications for projects like Chabahar are still being puzzled out by all sides. Short-term it’s easier to move ahead but long-term less clear,” said Andrew Small, a specialist at German Marshall Fund of the United States.

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