Topic: General Studies 2 and 3:
- India and its neighborhood- relations.
- Effect of policies and politics of developed and developing countries on India’s interests.
Lost opportunity: On India losing Chabahar project
Iran decided to proceed with the Chabahar port rail project by itself citing funding delays from India side in beginning and funding the project
Do You Know?
- Chabahar port is located on the Gulf of Oman and is only 72 km away from the Gwadar port in Pakistan which has been developed by China.
- The distance between Kandla and the Chabahar port is less than the distance between New Delhi and Mumbai.
- The Chabahar port, signed in 2003, has been jointly developed by India, Iran, and Afghanistan.
- The government sent exports to Afghanistan in 2018, and has moved over half-a-million tonnes of cargo, including grains and food supplies, for Afghanistan again, through the port
Significance of Chabahar Port
- It gives a boost to India’s bilateral ties with Iran which is a major oil supplier for India.
- It will give India access to Afghanistan, Russia and Europe, thus circumventing Pakistan
- The port and the rail project (Chabahar to Zahedan to Zarang near Afghanistan border) will enhance connectivity, energy supplies and trade
- The port is also a key link in the International North South Transport Corridor (INSTC), a multi-modal network of ships, rail and road routes to move freight between India to Russia via Iran.
- It will facilitate India’s role in Afghanistan’s development through infrastructure and education projects.
Why the recent move by Iran is considered as setback for India?
- India and Iran had agreed to construct 628km rail line from Chabahar port to Zahedan, which will be extended to Zaranj across the border in Afghanistan.
- This rail line was considered by India as an alternate trade route to Afghanistan & Central Asia.
- The state-owned Indian Railways Construction Ltd. (IRCON) had signed a MoU with the Iranian Rail Ministry in 2016 and promised to provide all services, superstructure work and financing (around USD 1.6 billion).
- Iran’s latest action comes in the backdrop of Iran finalising a 25-year strategic partnership deal with China worth $400 billion, negotiated in secrecy.
Reasons for Iran’s actions
- Delay in Indian funding due to fear of US Sanctions: Despite several site visits by IRCON engineers and preparations by Iranian railways, India never began the work, worrying that it could attract sanctions by the USA.
- Hiccups in bilateral relations: India has already zeroed out its oil imports from Iran due to USA sanctions. Bilateral ties with Iran took a hit in February 2020 after the riots in Delhi drew condemnation from Iranian
- Difficulties in logistics procurement: The USA had provided a sanctions waiver for the Chabahar port and the rail line but it was difficult to find equipment suppliers and partners due to worries of being targeted by the USA
- Better Deal with China: The $400 billion deal includes Chinese involvement in Chabahar’s duty-free zone, an oil refinery nearby and possibly a larger role in Chabahar port.
- Growing Iran-China relationship: Iran proposed a tie-up between the Chinese-run Pakistani port at Gwadar and Chabahar in 2019 and offered interests to China in the Bandar-e-Jask port 350 km away from Chabahar, as well as in the Chabahar duty-free zone.
In a world where connectivity is seen as the new currency, India’s loss could well become China’s gain.
Connecting the dots
- String of Pearls Theory
- Belt & Road Initiative of China