Fund Approved for Development of chabahar Port – $150 Million

Fund Approved for Development of chabahar Port – $150 Million

Fund Approved for Development of chabahar Port – $150 Million

The Union Cabinet on Wednesday gave approval to shipping ministry’s proposal for provision and operationalisation of credit of $150 million from EXIM Bank for development of Chabahar Port in Iran. The Chabahar Port lies outside the Persian Gulf in Iran and will help in expanding maritime commerce in the region.Fund Approved for Development of chabahar Port - $150 Million

India is negotiating this project to facilitate the growing trade and investment with Iran and other countries in the region, notably Afghanistan and also to provide opportunities to Indian companies to penetrate and enhance their footprint in the region. An MoU was signed between India and Iran in 2015.

About Chabahar Port And its importance for India 

Background

  • In 2003, India and Tehran had agreed to develop Chabahar Port located in the Gulf of Oman near Iran’s border with Pakistan.
  • However the venture was delayed because of the sanctions imposed over Iran’s atomic programme.
  • But in May 2015, prior to lifting of the sanctions both countries had singed Memorandum of Understanding (MoU) to fasten the development process.

Significance

  • Chabahar Port will help India to expand maritime commerce in the region and enhance footprint of Indian companies in the region.
  • It will also facilitate growth in India’s trade and investment with Iran and other countries in the region.
  • India will get sea-land access route to Afghanistan bypassing Pakistan in turn opening opportunities for Indian companies to explore Afghanistan’s mineral wealth.
  • It will also enhance Afghanistan’s overall connectivity to regional and global markets significantly giving fillip to its on-going reconstruction and humanitarian efforts.

It is an India-operated port in Iran and it could open a gateway for the country to Afghanistan and Central Asia. A look into why the port is of strategic importance :

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  • The decision to ink MoU with Iran for expansion of Chabahar Port will open up major commercial and strategic opportunities for India.
  • In the absence of transit through Pakistan, Iran is India’s gateway to Afghanistan, Central Asia, and Russia and beyond and the Chabahar port is the key element in that.
  • The location of the port has yet another significance. It is located barely 72 km away from the deep-sea Gwadar port.
  • Again India can monitor Pakistani & Chinese activities. While the Chabahar port is essentially meant for commercial purposes, India can use the facility to monitor Pakistani & Chinese navy activities in the Indian Ocean Region as well as Gulf.
  • Gwadar was the warm port that China has been eyeing for transportation of hydrocarbon from the Gulf region. Presence in Gwadar would have ensured China remains in close proximity of the Gulf & Indian Ocean Region.
  • Once functional, Chabahar will further undermine Gwadar. While Pakistan & China both had high hopes from Gwadar (built with Beijing’s assistance), the insurgency in Balochistan is proving to be Achilles hill for both the countries.
  • There were plans to link Gwadar with China via rail and connect the port through Karakorum Highway and build a pipeline till Khunjerab Pass bordering Gilgit-Baltistan and Xinjiang.
  • A link to Delaram-Zaranj road :Indian investment in the port would serve as a link to Delaram-Zaranj road that India built in Afghanistan. This port would give New Delhi a base to position itself after international troops withdraw from Afghanistan in 2014.
  • India-built Zaranj-Delaram road in Afghanistan will connect to the Chabahar port via Milak. Iran with financial aid from India is upgrading the Chabahar-Milak road.
  • Chabahar-Milak-Zaranj-Delaram highway:The Chabahar-Milak-Zaranj-Delaram highway will open up the Indian market to Afghan farm products and other exports.
  • It will also help combat the scourge of illicit drugs production and export and assist the trade, transport and transit network of Iran.
  • An Indian JV company will lease two berths in Chahbahar’s Phase-I for 10 years, which could be renewed by ‘mutual pact’. The JV will invest $85.21 m for equipping the two berths further within 12 months.

 

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