Introduction

An India-operated port in Iran’s Chabahar would open a gateway for the country to Afghanistan and Central Asia. The port is of strategic importance.

The decision to ink MoU with Iran for expansion of Chabahar Port, after a long delay, opens up major commercial and strategic opportunities for India

Why Chabahar is Crucial?

1. Sits at mouth of Strait of Hormuz area. It is at the Junction of shipping, oil trade routes About 100,000 ships sail by yearly
2. It Connects three regions: Central Asia, South Asia and West Asia
3. ChahBahar will foster Closer ties with Iran will allow Delhi to secure cheaper energy imports. ChahBahar hashold on two-thirds of world oil reserves. Chabahar Port route helps connect India with energy-rich Azerbaijan, Turkmenistan & other central Asian nations.Anestimated 17 billion barrels of crude oil passes this way daily.
4. It Gives India strategic heft in region; helps it bypass Pakistan & build closer ties with Iran and Afghanistan
5. This route is 40% shorter, 30% less expensive than trade via the Red Sea-Suez Canal-Mediterranean route
6. In the absence of transit through Pakistan, Iran is India’s gateway to Afghanistan, Central Asia, and Russia and beyond and the Chabahar port is the key element in that
7. The location of the port is significant asIt is located barely 72 km away from the deep-sea Gwadar port. Thus Once functional, Chabaharwill Offset China’s growing influence and reach in the region. will further undermine Gwadar.
8. While the Chabahar port is essentially meant for commercial purposes and provides transit route to Afghanistan, India Can use the facility to monitor Pakistani & Chinese activities in the India Ocean Region as well as Gulf. It could be convenient location for India to monitor activities of Pakistani Navy
9. Indian investment in the port would serve as a link to Delaram-zaranj road that India built in Afghanistan. Chabahar port would give New Delhi a base to position itself after international troops withdraw from Afghanistan
10. India-built Zaranj-Delaram road in Afghanistan will connect to the Chabahar port via Milak. Iran with financial aid from India is upgrading the Chabahar-Milakroad
11. The Chabahar-Milak-Zaranj-Delaram highway will open up the Indian market to Afghan farm products and other exports. It will also help combat the scourge of illicit drugs production and export and assist the trade, transport and transit network of Iran

Significance of the deal for Afghanistan

1. Unhindered access to the Indian Ocean
2. India-built highway will link country to Chabahar port, further trade
3. Afghanistan hopes to exploit $ltrillion of untapped mineral wealth to earn revenue

Run-Up To The Deal

In 2009, India built a 218 kin long (@$100m) link road from Delaram in western Afghanistan to Zaranj on the Iran-Afghan border to link up with Chabahar port

ZaranjDelaram highway connects with the 2,200 km two-lane metalled road network, known as the Garland Road that connects major cities in ‘the country

Rational for indian Investment in Chabahar

An Indian JV company will lease two berths in Chahbahar’s Phase-I for 10 years, which could be renewed by “mutual pact”. The JV will invest $85.21 m for equipping the two berths further within 12 months.

• India will invest $85m to build a container terminal & a multi-purpose cargo terminal
• On May 6, 2015, Union minister NitinGadkari signed MoU with Iran to complete this by Dee 2016
• Iran wants Chabahar to be the third major hub for its petrochemical industries
• Indian private & public sector entities projected investment worth $22b in the free trade zone area
• Chemicals, petrochem, steel, fertilizer are major sectors, besides Indian railways likely to invest
• India was offered the project to develop Chabahar port in 2003 by Iran, intended to be a critical access-point to landlocked Afghanistan
• For Afghanistan, an operational Chabahar route was a better alternative. It would reduce its dependence on Pakistan – the sole nation providing it access to the sea
• Pakistan has been reluctant to allow Indian goods to pass overland through its territory
• The project did not take off over US sanctions against Iran, but India has gone ahead now follwing lifting of the sanctions

Factors that will obstruct  Chabahar in its full development.

Chahbahar has the potential to alter the entire strategic relations of Afghanistan and Iran with India and oil geopolitics of Central Asia. But the path is not going to be easy.

1. The fate of the Chabahar project will depend on successive governments showing sustained resolve in the face of geopolitical hurdles. The potential spoilers are several.
   • For one, relations between Tehran and the West, though vastly improved, remain fraught, with many hardliners in Iran believing the country was short-changed in the nuclear deal that paved the way for an end to sanctions. That, potentially, could lead to tensions
   • There could be differences over Iran’s role in Syria and Afghanistan.
   • Indian governments will also have to incentivise private corporations for using the Iranian route to transit goods to Central Asia, rather than the fast, cheap networks they now use through Singapore and China.
   • Finally, the project can only be successful if Indian manufacturing is globally competitive.

With inputs from K Siddhartha Sir