India-Iran Port Deal the Beginning of More Extensive Relationship - Global Trade Magazine
  June 3rd, 2016 | Written by

India-Iran Port Deal the Beginning of More Extensive Relationship

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  • China recently pledged $46 billion to develop Pakistan's Gwadar port, 125 miles from Chabahar.
  • The India-Iran relationship also includes a regional strategic element.
  • India welcomed the lifting of nuclear-related sanctions against Iran in January 2016.

India pledged last week to contribute $500 million to the development of a port at Chabahar in southern Iran. The deal is part of a three-nation agreement that also includes Afghanistan.

The deal helps provide India with access to markets in Iran, Afghanistan, and Central Asia, which it has long coveted but which was thwarted due to its contentious relationship with neighboring Pakistan.

India’s investment of $500 million in the port itself is just the beginning of India’s efforts top help Iran and Afghanistan develop transportation infrastructures which will further India’s market-expanding goals. A further $16 billion investment will go toward a Chabahar free trade zone, which will include rail links heading north into Afghanistan.

India’s activities also container a geopolitical element, as rival China recently pledged $46 billion to develop Pakistan‘s Gwadar port, 125 miles from Chabahar, together with railways, pipelines, and roads that will connect to western China. The India-Iran relationship also includes a regional strategic element.

The Chabahar project is not new, having first been floated by India in 2003. It has become possible now thanks to lifting of some sanctions against the Islamic Republic in the wake of the nuclear deal between Iran and six major powers, including the United States.

“India welcomed the announcement of lifting of nuclear-related sanctions against Iran in January 2016,” noted a document from India’s External Affairs Ministry. The ministry lost no time opening a channel to Iran, as in a letter from the external affairs minister to her Iranian counterpart stated that the milestone would open “vast opportunities for our two countries to expand their ongoing mutually beneficial cooperation in a number of spheres including energy infrastructure and regional connectivity.”

The Chabahar port deal was concluded during a visit by Indian Prime Minister Narendra Modi to Tehran in which he described the agreements signed as part of a “new chapter in our strategic partnership” which will include “deeper connectivity, including railways and partnerships in the oil and gas sector.”

Modi said the trilateral Transport and Transit Agreement between Iran, India and Afghanistan “will open new routes for India, Iran and Afghanistan to connect among themselves.” India and Iran also agreed to consult on the spread of radicalism and terror and on issues of defense and maritime security.

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