Indian Prime Minister Narendra Modi’s visit to Iran this week resulted in the signing of 12 agreements, including a landmark US$500mn financing for the development of the port of Chabahar.
The Export-Import Bank of India is providing US$150mn of the overall financing, and making an additional US$450mn available to Iran for the import of steel rails and the implementation of the port project.
India Ports Global Private Limited (IPGPL) and Arya Banader of Iran will jointly conduct the 10-year development of two terminals and five berths with cargo-handling capacities. Meanwhile, IRCON, India’s third-largest construction company, will fund and develop the US$1.6bn Chabahar-Zahedan railway line, which forms part of a wider plan to link Chabahar to Afghanistan and Central Asia.
India also plans to invest US$16bn in the Chabahar free trade zone. The country’s enthusiasm for the port is natural, as it is key to the expansion of trade routes from India to Iran, but also Afghanistan and even Russia, all bypassing Pakistan. Current routes to these countries are said to be unreliable due to Pakistan’s stalling of Indian goods passing through its territory.
The port is widely seen as India’s attempt to counter Chinese influence in the region, as China is the main investor in Pakistan’s Gwadar port, 72km to the east of Chabahar.
“With our joint investments in Chabahar, we can connect India through a reliable route to Afghanistan and countries in Central Asia,” said Iranian President Hassan Rouhani when announcing the deal. “The agreement today is not only an economic document: it’s also a political and a regional one.”
The other agreements signed this week include a cultural exchange programme and co-operation in the areas of foreign policy, science and technology, mining and export guarantees.