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India inks Chabahar port's 10-year deal with Iran

Published: 14th May, 2024

Context

India recently signed a significant 10-year agreement with Iran to develop and operate the Chabahar port, bolstering ties with this strategic Middle Eastern nation.

Background:

  • India has been working on developing the Chabahar port in Iran as a vital route to transport goods to Iran, Afghanistan, and Central Asian countries.
  • In 2016, India, Iran, and Afghanistan inked the Trilateral Agreement, solidifying Chabahar’s role as an International Transport and Transit Corridor.
  • However, progress on the port's development was slowed due to U.S. sanctions on Iran (2019).

Key Highlights of the Agreement:

  • The contract was signed between Indian Ports Global Limited (IPGL) and the Port & Maritime Organisation of Iran.
  • IPGL will invest approximately $120 million, with an additional $250 million in financing, bringing the total contract value to $370 million. Since taking over operations in 2018, IPGL has handled significant container traffic and bulk cargo.
  • The long-term contract is expected to significantly boost economic activities and enhance India's role in global trade and commerce.

Significance of Chabahar Port:

  • Easy access to market: The port is an optimally located node for accessing Afghanistan, Central Asia, the Caucasus and Eurasian markets. 
  • Easy access to INSTC: Chabahar Port, located on Iran's southwestern coast, provides easy access to India's west coast and forms a crucial link in the International North-South Transport Corridor (INSTC). It connects India to Russia and Central Asia via the INSTC, facilitating the movement of goods between these regions.
  • Reduced time and cost: This collaboration between India and Iran aims to reduce transportation costs and time, promoting trade in the region.
  • Energy Security: It offers India a strategic advantage in securing its energy needs. With Iran holding substantial reserves of oil and natural gas, Chabahar provides India with direct access to these resources, bypassing maritime chokepoints like the Strait of Hormuz.
  • Diversified routes: Chabahar Port offers strategic advantages to India's oil and gas sector by diversifying import routes, accessing new markets in Central Asia, and enhancing energy security. By bypassing Pakistan’s ports (Karachi and Gwadar), India will reduce its dependency on traditional routes (vulnerable to disruptions). 
  • Expanding footprints: By leveraging Chabahar Port, India can mitigate risks associated with traditional import routes, expand its energy footprint, and assert its presence in regional geopolitics.

PYQ

Q1: Mention the significance of straits and isthmus in international trade. (2022)

Q2. What is the importance of developing Chabahar Port by India? (2017)

  1. India’s trade with African countries will enormously increase.
  2. India’s relations with oil-producing Arab countries will be strengthened.
  3. India will not depend on Pakistan for access to Afghanistan and Central Asia.
  4. Pakistan will facilitate and protect the installation of a gas pipeline between Iraq and India.

Solution: (c)

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