An Iranian diplomat in an interview has said that Tehran now hopes that New Delhi will help facilitate equipment for the Chabahar-Zahedan railway line under a line of credit promised to it in 2018.

Try this question

Q. Discuss the strategic and economic significance of Chabahar Port and Rail Project for India.

Recent controversy

• The Iranian government in July had decided to proceed with the construction of this project on its own, citing delays from the Indian side in funding and starting the project.

The Chabahar Rail Project

• It is a 628 km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan.
• The entire project would be completed by March 2022.
• It was meant to be part of India’s commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.

Why did Iran omit India from the project?

• Despite several site visits by engineers, and preparations by Iranian railways, India never began the work, ostensibly due to worries that these could attract U.S. sanctions.
• The U.S. had provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to worries they could be targeted by the U.S.
• India has already “zeroed out” its oil imports from Iran due to U.S. sanctions.

India’s reluctance with Iran

• Looking at the whole aspects of relations, when it comes to politics, there has been a great common understanding and shared interests.
• But when it comes to economic and trade relations, it has been subject to some limits and restrictions, which are hampered by the various sanctions imposed.
• The US had put pressure directly or indirectly on the relations, although that has not been the will of both sides.

The contentious partnership with China

• Iran and China are close to finalising a 25-year Strategic Partnership which will include Chinese involvement in Chabahar’s duty-free zone, an oil refinery nearby, and possibly a larger role in Chabahar port as well.
• The cooperation will extend from investments in infrastructure, manufacturing and upgrading energy and transport facilities, to refurbishing ports, refineries and other installations.
• It is also rumoured that the Chabahar port will be leased to China surpassing India.
• Iran had proposed a tie-up between the port at Gwadar and Chabahar last year and has offered interests to China in the Bandar-e-Jask port 350km away from Chabahar, as well as in the Chabahar duty-free zone.

Back2Basics: India-Iran Partnership over Chabahar Port

• In 2016, India signed a deal with Iran entailing $8 billion investment in Chabahar port and industries in Chabahar Special Economic Zone.
• The port is being developed as a transit route to Afghanistan and Central Asia.
• India has already built a 240-km road connecting Afghanistan with Iran.
• All this were expected to bring cargo to Bandar Abbas port and Chabahar port, and free Kabul from its dependence on Pakistan to reach the outer world.
• Completion of this project would give India access to Afghanistan and beyond to Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, Kazakhstan, Russia and Europe via 7,200-km-long multi-modal North-South Transport Corridor (INSTC).

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