India’s decision to more than double the outlay for developing the strategic Chabahar port in Iran in fiscal 2020-21 signals the government’s determination to push ahead with the project after a clear signal from the US that it won’t be affected by sanctions.
The budget for the external affairs ministry, unveiled on Saturday, shows the allocation for the port on the Gulf of Oman in southeastern Iran has gone up from Rs 45 crore in fiscal 2019-20 to Rs 100 crore in fiscal 2020-21. However, the official figures showed even the allocation of Rs 45 crore was not expended.
People familiar with developments said this was largely due to the reluctance of Indian and foreign firms to get involved in the development of Chabahar due to the potential impact of US sanctions imposed on Iran in 2018. The Centre had set aside funds to acquire cranes and other heavy equipment but firms did not bid for contracts, the people said.
During the India-US 2+2 meeting of the foreign and defence ministers of the two countries in Washington in December, the American side reiterated that the sanctions wouldn’t affect Chabahar, which India sees as key to bypassing Pakistan to access markets in Afghanistan and Central Asia. After the meeting, external affairs minister S Jaishankar had thanked his American counterpart Mike Pompeo for reiterating the US government’s support for the project.
The people cited above said the US has made its support conditional to the exclusion of Iran’s Islamic Revolutionary Guard Corps and its affiliates from all efforts to develop the port and road and rail links to the Afghan border. In Jaishankar’s subsequent visit to Iran in December, the two countries agreed to boost Chabahar’s economic viability, including steps such as providing larger subsidies to merchant shipping using the port.
{{/usCountry}}The people cited above said the US has made its support conditional to the exclusion of Iran’s Islamic Revolutionary Guard Corps and its affiliates from all efforts to develop the port and road and rail links to the Afghan border. In Jaishankar’s subsequent visit to Iran in December, the two countries agreed to boost Chabahar’s economic viability, including steps such as providing larger subsidies to merchant shipping using the port.
{{/usCountry}}This decision came in the wake of New Delhi and Tehran concluding that they had achieved the political objectives behind developing Chabahar.
Former ambassador Talmiz Ahmad, who has wide experience of serving in West Asia, said only international firms had the expertise to properly develop Chabahar but they had been reluctant to get associated with the project because of the US sanctions. “You need world-standard facilities such as cranes and warehouses. There was no response to tenders, mainly because of the fears of secondary sanctions. Now, with the US commitment, there is a feeling of renewed confidence in New Delhi that we will be able to attract international bidders and this is reflected in the increased outlay,” he said.