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CHABAHAR: India’s Gateway to Central Asia

For India, the Chabahar port project is expected to serve a number of purposes, including expansion of trade, investments and transit facilitation for the Central Asian Republics. Shashwat Tiwari provides an insight into the various aspects of this crucial project.

The recent decision by the Indian government to invest further in the Iranian port city of Chabahar demonstrates the importance of this port for India. The port, located in the Sistan-Baluchistan Province on Iran’s south-eastern coast, is of immense strategic value as it lies outside the Persian Gulf and can be easily accessed from India’s west coast.

Source: The Hindu
                         Source: The Hindu

The development of Chabahar has been discussed often during India-Iran bilateral talks since 2003, but has gained higher priority in recent times. On August 2012, India, Iran and Afghanistan held a trilateral meeting to discuss the Chabahar port development project and agreed to speed up the process. The initiative is expected to serve a number of purposes, including expansion of trade, investments and transit facilitation for the Central Asian Republics (CARs). The intergovernmental memorandum of understanding (MoU) proposed to be signed between India and Iran is likely to comprise the following main elements:

  • An Indian Joint Venture (JV) company will lease two fully constructed berths in Chabahar port’s Phase-I project for a period of ten years, which could be renewed by mutual agreement.
  • The JV Company will invest US $ 85.21 million for equipping the two berths within 12 months as a container terminal, and the second as a multi-purpose cargo terminal.
  • The Indian and Iranian sides could enter into subsequent negotiations for participation in the construction, equipping and operating of terminals in Phase-II on build-operate-transfer (BOT) basis, subject to the Indian side’s satisfactory performance in Phase-I.
The Indian government also approved the proposal to constitute a JV or other appropriate Special Purpose Vehicle (SPV) comprising the Jawaharlal Nehru Port Trust (JNPT) and the Kandla Port Trust (KPT), and if required, a local Iranian partner and/or an Indian private sector partner to serve as the means for India’s participation in the development of the port. The Indian government also approved incurring an annual revenue expenditure of US$ 22.95 million to support the operational activities of the Indian JV.

India’s presence in Chabahar port would give it a sea-land access into Afghanistan as well as to Central Asia through Iran’s eastern borders. From the Chabahar port, using the existing Iranian road network to the border town of Zaranj in Afghanistan, which is at a distance of 883 kilometers from the port. Furthermore, the Zaranj-Delaram road constructed by India in 2009 (the garland highway) can also be used to access four of the major cities of Afghanistan; Herat, Kandahar, Kabul and Mazar-e-Sharif.

This infrastructure will cater to the needs of Indian state-owned and private companies to extract iron-ore from the Hajigak mines in Bamiyan province, that a route for exporting this natural resource from Afghanistan through Iran back into India. These resources, of course, also represent huge potential income for Afghanistan. Finally, this infrastructure provides India with a route for Indian exports (and continued aid) to Afghanistan. This sea-land route to and from Afghanistan through Iran is of significance to India, given the continued intransigence of the Pakistani government in not allowing India access to the faster and cheaper land route across their country, even for transporting humanitarian goods. The port facility at Chabahar can also provide India an alternative to its long-standing energy pipeline projects like Turkmenistan-Afghanistan-Pakistan-India (TAPI) or the Iran-Pakistan-India (IPI), which have been stalled due to geopolitical reasons.

India’s ‘Connect Central Asia’ policy, which is a broad-based approach, includes political, security, economic and cultural connections, concentrates on strengthening India’s strategic and security cooperation in the region. India is also working to connect Iran and Afghanistan with Tajikistan and other CARs via these roads, thereby increasing regional trade as well as creating a route for India to access the rich gas and oil reserves of Central Asia.

The question that concerns India is that any external influence in CARs will have serious implications, direct or indirect, for the countries of the region. Related to the geo-strategic significance of CARs is the problem of religious extremism/terrorism or what CARs call ‘political Islam’ and problem of drugs and arms trafficking. India, as an extended neighbour of CARs, has major geo-strategic and economic interests in this region. The future prospects for cooperation between Central Asia and India in the field of energy security assume great importance. Peace and stability in CARs and Afghanistan seem to be the most crucial factor for India’s security.

For India, Chabahar port project is expected to serve a number of purposes, including expansion of trade, investments and transit facilitation for the CARs. The port will serve as the Indian Ocean outlet for Central Asia, and provide connectivity to the proposed International North South Corridor (INSTC) running northward through Iran and Afghanistan, which will also provide India vital access to Central Asian Republics, Russia, and ultimately European markets, enabling India to effectively compete with China.

Although there are no signs of any significant Indian-Iranian naval cooperation, commercial maritime cooperation and joint transportation infrastructure development has elevated the level of India-Iran strategic cooperation.

While India will secure access to markets in Central Asia for its future economic growth, Iran would be able to facilitate further connectivity to CARs for its resources. As India is constructing infrastructure in Afghanistan, this port can to develop as a hub for trading of commodities in the region.

Note: This article was first published on National Maritime Foundation’s website 

Shashwat Tiwari is currently a Research Associate at the National Maritime Foundation (NMF), New Delhi.

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