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India signs agreement to operate Iran’s Chabahar Port for a decade

May 14, 2024 at 7:49 pm

A cargo ship sails through the Shahid Beheshti Port in the southeastern Iranian coastal city of Chabahar, on the Gulf of Oman, during an inauguration ceremony of new equipment and infrastructure on February 25, 2019 [ATTA KENARE/AFP via Getty Images]

India has signed a 10-year contract with Iran to develop and operate the Iranian port of Chabahar, in a move that New Delhi hopes will open its path to Central Asia.

Signed yesterday in the Iranian town of Chabahar by India’s Shipping Minister, Sarbananda Sonowal, and Iran’s Urban Development Minister, Mehrdad Bazrpash, the agreement gives India 10-year access to use the Chabahar Port and is New Delhi’s first major overseas port venture.

It will reportedly see India invest $120 million in infrastructure development on the project, as well as to extend a $250 million line of credit to Iran.

Following the signing, Sonowal stated that the “long-term contract symbolises the enduring trust and effective partnership between India and Iran”, and explained the port’s significance in that it “transcends its role as a mere conduit between India and Iran. It serves as a vital trade artery connecting India with Afghanistan and Central Asian countries.”

On the part of Iranian Minister, Bazrpash, he expressed that “We are pleased with this agreement, and we have full trust in India.”

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Aside from providing yet another hub for imports and exports and increasing trade opportunities between Tehran and New Delhi, the port is particularly set to serve as a strategic trade route for India to gain access to landlocked Central Asian states such as Afghanistan and beyond, in a way that allows the Indians to bypass their long-standing rival, Pakistan.

The agreement comes almost a decade after India began assisting in the development of Chabahar Port by building new cargo berths and terminals in 2016, following the United States’ short-lived easing of sanctions on Iran.

A major potential obstacle which could stand in the way of New Delhi’s aims, however, is the threat of sanctions. Following the signing of the agreement, US State Department spokesperson, Vedant Patel, reminded reporters that sanctions on Iran remain in place and that they will continue to be enforced. “Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions.”