How the strategic Chabahar port may bolster India-Iran ties | epaper | Hindustan Times
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How the strategic Chabahar port may bolster India-Iran ties

Prime Minister Narendra Modi quoted Urdu poet Ghalib and spoke about ‘dosti (friendship)’ as India and Iran on Monday signed 12 pacts, including the agreement to develop Chabahar port — a significant development given the strategic location of the Iranian port with direct access to the Indian Ocean region.

epaper Updated: May 24, 2016 10:00 IST
Suchetana Ray
Prime Minister Narendra Modi interacts with Iranian President Hassan Rouhani during a joint press conference at the Saadabad Palace in Tehran.
Prime Minister Narendra Modi interacts with Iranian President Hassan Rouhani during a joint press conference at the Saadabad Palace in Tehran.(PTI)

Prime Minister Narendra Modi quoted Urdu poet Ghalib and spoke about ‘dosti (friendship)’ as India and Iran on Monday signed 12 pacts, including the agreement to develop Chabahar port — a significant development given the strategic location of the Iranian port with direct access to the Indian Ocean region.

Modi is the first Prime Minister to visit Iran in 15 years, a clear signal to the Persian Gulf country of India’s keenness to forge deeper ties. Given the growing closeness with America in the past decade, this would mean India is ready to take its Iran policy out of cold storage.

The Chabahar port will allow India to counter China’s expanding influence in the Indian Ocean region. It will allow also allow New Delhi to bypass Pakistan and access global markets.The port is just 100km from Pakistan’s Gwadar port, which is being developed by China.

“The signing of the agreement to develop Chabahar port is a significant milestone in the evolving economic cooperation between India and Iran. It opens up opportunities in bilateral trade and investment,” economic affairs secretary Shaktikanta Das told HT.

Modi said the bilateral agreement to develop Chabahar, in southern Iran, and the “availability of about $500 million from India for this purpose is an important milestone,” in relations between the two countries.

Read: India, Iran and Afghanistan sign Chabahar port agreement

In the pipeline since 2003, this agreement will open new trade vistas for India. State-run railway body IRCON International will set up a railway line at Chabahar to transport goods right up to Afghanistan. The 500-km rail link between Chabahar and Zahedan will link India to the rest of Iran’s railway network.

Nalco (National Aluminium Company Limited) is looking to set up an aluminium smelter at Chabahar free-trade zone. A joint venture between the Jawaharlal Nehru Port Trust and the Kandla port will invest $85 million (Rs 575 crore) to develop two container berths, 640-metre long and three multi-cargo berths. India also plans to set up a fertiliser plant through a joint venture with the Iranian government.

Moreover, energy security is key for the government, and a renewed friendship with Iran will go a long way. “Iranian crude is very suitable for Indian refineries and its demand is high. Renewed ties could make the under-sea pipeline for evacuating Iranian gas a reality” said RS Sharma, former chairman and managing director of ONGC.

India is one of the biggest buyers of Iranian crude and is set to import at least 400,000 barrels per day from the country in 201617. But it built up a backlog of payments when Iran was under sanctions — $6.4 billion is due from Indian refiners Essar Oil and MRPL.

After the end of bilateral talks between Modi and Iranian President Rouhani, top sources in the Indian government said “India is keen to settle the entire oil due, keeping in mind the emerging economic relationship with Iran”.

Part of this relationship will be to allow ONGC Videsh to drill the Farzad gas fields in the Persian Gulf. Discovered by ONGC Videsh in 2008, the gas fields have not yet been developed as India failed to enter into a contract with Iran. Modi’s visit has started the facilitation process, sources said.

Read: It’s time for India and Iran to regain past glory, says PM Modi