Why in news?

India and Iran signed a long-term agreement covering Indian operations at the Chabahar port, eight years after concluding the general framework of cooperation for the port in Iran.

What’s in today’s article?

• Chabahar port
• Significance of Chabahar Port
• 10-year agreement for Chabahar port operation

Chabahar port

• About
  • 
  • Chabahar is a deep-water port in Iran’s Sistan-Baluchistan province. It is the Iranian-port that is the closest to India.
  • It is located in in south-eastern Iran, on the Gulf of Oman, providing easy and secure access for large cargo ships.
  • It is Iran’s first deepwater port that puts the country on the global oceanic trade route map.
• Development of port
  • An MoU for the development of Chabahar port by India was signed in May 2015. The contract was executed in May, 2016 during the visit of PM Modi to Iran.
• Current status
  • India has so far supplied six mobile harbour cranes (two of 140-tonne and four of 100-tonne capacity) and other equipment worth $25 million.
  • India Ports Global Ltd (IPGL has been operating Chabahar port through its wholly owned subsidiary, India Ports Global Chabahar Free Zone (IPGCFZ), since December 24, 2018.
  • The port has handled more than 90,000 twenty-foot-equivalent units (TEUs) of container traffic and more than 8.4 million metric tonnes (MMT) of bulk and general cargo since then.

Significance of Chabahar Port

• Strategic significance to both Iran and India
  • It can potentially help Tehran ward off the effect of Western sanctions.
  • It offers New Delhi an alternative route that bypasses Pakistan in order to ensure access to Afghanistan and Central Asia.
    • The port is partly intended to provide an alternative for trade between India and Afghanistan as it is 800 kilometres closer to the border of Afghanistan than Pakistan's Karachi port.
    • Pakistan does not allow India, land access for trade with Afghanistan and Central Asia.
• Humanitarian corridor
• The port has also facilitated the supply of humanitarian assistance, especially during the Covid-19 pandemic.
• Till date, a total of 2.5 million tonnes of wheat and 2,000 tonnes of pulses have been transshipped from India to Afghanistan through Chabahar port.
• In 2021, India supplied 40,000 litres of the environment friendly pesticide (malathion)through the port to Iran to fight locust attacks.
• Chabahar and International North-South Transport Corridor (INSTC)
  • The INSTC, which was initiated by Russia, India, and Iran, is a multi-modal transportation route envisaged to link the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, and onward to northern Europe via St Petersburg in Russia.
  • 
  • The INSTC envisages the movement of goods:
    • from Mumbai to Bandar Abbas in Iran by sea;
    • from Bandar Abbas to Bandar – e- Anzali, an Iranian port on the Caspian Sea, by road;
    • from Bandar-e-Anzali to Astrakhan, a Caspian port in the Russian Federation by ship; and
    • onward to other parts of the Russian Federation and Europe by rail
  • Hence, INSTC and Chabahar Port will complement each other for optimising Indian connectivity with Russia and Eurasia.
• Tool to strengthen India’s relation with Iran & Afghanistan
  • This port has potential to herald a new age of trade, marine cooperation, and transshipment while boosting trilateral trade between India, Iran, and Afghanistan.

10-year agreement for Chabahar port operation – key highlights

• Agreement signed
  • The long-term agreement was signed between Indian Ports Global Ltd. (IPGL) and Port and Maritime Organisation (PMO) of Iran, enabling operation of the Shahid-Behesti terminal.
• Funding
  • IPGL will invest approximately $120 million in equipping the port.
  • India has also offered a credit window equivalent to $250 million for mutually identified projects aimed at improving Chabahar-related infrastructure.
• Significance
  • This agreement has cleared the pathway for bigger investments to be made in the port.
    • The signing of long-term agreement got delayed due to some tricky issues, including arbitration.
    • In the absence of long-term agreement, the two countries had concluded short-term leases.