India, Iran close to finalising long-term agreement on Chabahar port

Updated on Sep 10, 2022 02:48 PM IST

The move for an India-Iran long-term agreement on Chabahar port comes at a time when China has been showing growing interest in investments in ports and other coastal infrastructure in Iran

The Chabahar port agreement figured in discussions during shipping and waterways minister Sarbananda Sonowal’s visit to Iran last month. (File)
The Chabahar port agreement figured in discussions during shipping and waterways minister Sarbananda Sonowal’s visit to Iran last month. (File)

India and Iran are close to striking a long-term agreement for operations at the strategic Chabahar port, with the matter held up only by differences on a clause related to arbitration, people familiar with the matter said.

The long-term agreement, valid for a period of 10 years and to be extended automatically, is meant to replace an initial pact which covered India’s operations at Shahid Beheshti terminal in Chabahar port and has been renewed on an annual basis.

The move comes at a time when China has been showing growing interest in investments in ports and other coastal infrastructure in Iran, and the Iranian side has been pressing New Delhi to step up development of Shahid Beheshti terminal, which is operated by state-run India Ports Global Limited (IPGL).

The long-term agreement figured in discussions during shipping and waterways minister Sarbananda Sonowal’s visit to Iran last month, especially his meeting with Iran’s urban development minister Rostam Ghasemi.

The issue holding up the long-term agreement is not major and relates only to jurisdiction for arbitration of differences on any matters, the people said. Under Iran’s Constitution, such arbitration cannot be referred to foreign courts, and a proposal under the agreement would require a constitutional amendment, which would be difficult, they pointed out.

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Both sides, however, are hopeful of the speedy resolution of this matter as legal and technical experts are working on it, the people said.

At the same time, the Iranian side has been pushing India to speed up development of its operations at Chabahar port, including the completion of the 700-km Chabahar-Zahedan railway line.

Less than 200km of this crucial rail link remain to be completed and in the face of hesitation to deal with a construction company with links to the US-sanctioned Islamic Revolutionary Guard Corps, Tehran has suggested a contract can be finalised by the Indian side with some other body, the people said.

Since IPGL began operations at Shahid Beheshti terminal in late 2018, it has handled more than 4.8 million tonnes of bulk cargo, including trans-shipments from Australia, Bangladesh, Brazil, Germany, Russia and the UAE, and experts said this figure could be significantly enhanced if the port is linked to the rail network.

India took up the development of Shahid Beheshti terminal under a tripartite agreement on Chahbahar signed with Iran and Afghanistan in May 2016. Afghanistan is effectively no longer part of the arrangements since the takeover of the country by the Taliban last year, though the port has benefited from a US waiver on sanctions imposed on Iran.

India pledged it would invest $85 million in the terminal and has so far supplied cranes and other equipment worth some $24 million. The people pointed out there is a need to expedite the supply of more equipment such as heavy gantry cranes for transferring cargo from ships to land.

During Sonowal’s visit, the two countries decided to form a joint technical committee for the smooth functioning of the port. India remains “fully committed to develop the Chabahar port to realise the vision” outlined during Prime Minister Narendra Modi’s visit to Iran in 2016, Sonowal said at the time.

India is set to organise a meeting of a joint working group on Chabahar with Central Asian states in October to promote the use of the port, the people said. Steps are also being taken to integrate the port with the International North-South Transport Corridor (INSTC).

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