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Decade-Long Chabahar Port Lease Cements India-Iran Trade Corridor

In a significant development for regional connectivity, India and Iran have inked a 10-year contract granting India operational control over a terminal at Iran’s Chabahar Port. This landmark agreement is expected to bolster not only bilateral trade but also strategic ties, facilitating direct access to Central Asian markets and bypassing the challenging terrain of neighboring Pakistan.

The pivotal deal was cemented between India Ports Global Ltd (IPGL) and Iran’s Port & Maritime Organisation (PMO) in an official ceremony attended by India’s Minister of Ports, Shipping and Waterways, Sarbananda Sonowal. “The long-term bilateral contract on Chabahar Port Operation was signed between Indian Ports Global Limited (IPGL) of India and the Port & Maritime Organisation (PMO) of Iran, enabling the operation of the Shahid-Beheshti terminal within the Chabahar Port Development Project for a decade,” detailed the statement released following the signing.

Marking a first in India’s maritime history, this agreement allows India to manage a foreign port, with expectations set high for amplifying trade in the region. “This agreement is designed to augment regional connectivity and facilitate trade, especially reinforcing the commercial triangle between India, Iran, and Afghanistan,” the official statement elaborated. In 2019, facilitated by the India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, Chabahar port oversaw its first consignment of exports traveling from Afghanistan to India. While interim agreements kept the port’s operations afloat, the pursuit for a long-term contract gained momentum with Minister Sonowal’s visit to Chabahar in the latter half of 2022.

“This decadal lease agreement not only fortifies the bilateral relations but also instills a renewed sense of trust within the trading communities of the region,” the statement expressed with optimism. Under the terms of the agreement, India will be investing in modern maritime infrastructure, including the procurement of Mobile Harbour Cranes (MHCs), Rail Mounted Quay Cranes (RMQCs), Rubber-Tyred Gantry Cranes (RTGCs), Reach Stackers, Forklifts, and Pneumatic Unloaders at the Chabahar port. “The agreement paves the way for heightened trade and investment opportunities, potentially catalyzing India’s continued economic growth,” the statement added.

Ports Minister Sonowal, speaking at the signing event, articulated the significance of the contract in solidifying India’s long-term association with Chabahar. He emphasized that the agreement would not only increase the economic viability and visibility of the port but would also mark a turning point in the region’s commercial landscape. He remarked, “With the signature of this contract, we have laid the foundations of India’s long-term involvement at Chabahar.” Sonowal took the opportunity to also discuss bilateral trade and infrastructure with his Iranian counterpart, Minister of Roads & Urban Development Mehrdad Bazrpash.

Strategically positioned in the Sistan-Balochistan province on Iran’s southern coast, the Chabahar port is a crucial nexus for India and Iran’s joint aim to enhance trade in the region. The port serves as an integral node for the International North-South Transport Corridor (INSTC), a 7,200-kilometer multi-modal transportation network designed to ferry goods between India, Iran, Afghanistan, and other Central Asian countries, thus reaching European borders.

Long-standing conversations concerning the port’s development date back to 2003, with India committing a significant investment of USD 100 million in 2013. The Memorandum of Understanding (MoU) and initial contracts were executed following the state visits of Indian dignitaries to Iran.

Chabahar, being an open sea port, is pivotal for India’s strategic interest—to establish a direct maritime link to Afghanistan and further into Central Asia, circumventing Pakistan. Proximity wise, Gujarat’s Kandla port is the closest Indian port to Chabahar at a distance of 550 Nautical Miles, while Mumbai is 786 Nautical Miles away.

Since its operational inception in 2019, Chabahar has handled a significant volume of container traffic surpassing 80,000 TEUs and has managed over 8 million tonnes of bulk and general cargo. The Indian Ministry of External Affairs (MEA) has allocated Rs 100 crore for the Chabahar Port for 2024-25, reflecting India’s dedication to strengthening connectivity projects with Iran.