Strategic Relations: Chabahar Port development by India

Indian government decided to invest in the strategically important Iranian port of Chabahar in Iran.As per the cabinet decision,India will invest $85.21 million in developing the port for use by India.Apart from this,the Cabinet decided to invest an annual revenue expenses of $22.95 million to support the efforts.The first phase of the project,an Indian Joint venture-JV company-consisting of Jawaharlal Nehru Port Trust-JNPT and Kandla Port Trust-may partner with one or more Iranian concerns,with approval from the Iranian Ports and Maritime Organisation,to execute the project on build-operate-transfer -BoT basis.The JV will develop and operate the port for 10 year.The JV will build,equip two berths within a year-one of them as a container terminal and the other as a multi-purpose cargo terminal.Based on the performance of the JV during the first phase,depending on the satisfaction of both the countries,further negotiations can be conducted for the continuation of the arrangement again on BOT basis.The decision to develop Chabahar as a strategic,if not commercial port,was hanging fire for quite sometime.Even since former Iranian President Khatami offered India to build and operate Chabahar port during his visit to India in 2003,foreign policy mandarins in India wasted valuable time weighing the pros and ons of the project.The imposition of extensive US sanctions on Iran in 2006,and improvement in India-US relations put paid to the hopes of Indian investments in the port,even if it made tremendous strategic sense for India to invest in Chabahar.

India faced resistance from Islamabad to send essential items to Afghanistan through Karachi port,Chabahar port would find mention in strategic discourse in India as a project worth investing in.But it is primarily Indian sensitivity to US ceoncerns about Iran which came in the way of developing Chabahar port and alternate transit route through it to Afghanistan.India could not make such progress on the Chabahar port,as part of its overall plan to bypass Pakistan and access Afghanistan and Central Asia through Iran,India built the 218 km-long Zarani.India spent about 600 crore rupees to build this connecting highway.The project was executed over four years by Border Roads Organisation-BRO,which lost two of its employees along with four Indo-Tibetan Border Force-ITBP and 100-odd Afghan workers to insurgent attacks.By 2014,Iran decided to invest heavily in Chabahar all on its own.Its main aim has been to prepare Chabahar as the third major hub for petrochemical industries in Iran.The Iranian goverment has earmarked a large area spread over about 1,100 hectares as petrochemical complex.This area is being developed to attract both domestic and external investment.The Iranian Government also has plans to link Chabahar with Zahedan and Mashhad by rail.A new pipeline is also being considered for transferring South Pars ethane gas to Chabahar.A railway station is being built to connect the industrial zone with the port.This petro chemical investment zone has drawn Chinese company.

Iranian companies already invested in this industrial zone.Many foreign companies from Europe,Oman also coming for investment here.China has already invested in Chabahar in the heavy oil refinery sector.A new Chinese refinery is coming up just opposite the upcoming petrochemical zone.There is a beeline of Chinese businessmen for investing in Iran,in general and the in the port city,in particular.Some of the Chinese businessmen have already setup a special market complex to sell Chinese items.For Iranians,Indian interest in Chabahar is reactive rather than proactive.Many Iranian observers see that Indian decision to invest in Chabahar port is last ditch effort to compensate for years of non-active.In the Chabahar free zone,Iranians are interested with India as logistic zone jointly with India with the purpose of providing services for transit and trade.Early activation of shipping lines between Chabahar and Indian ports like Kandla and Mumbai is also being urged by Iranians for quite some time.Indian observers indicated that Chabahar port for both oil and non-oil trade.Connectivity is a key issue for the Indian governmen today.With Chabahar providing India access to Afghanistan and Central Asia bypassing Pakistan,investment in Chabahar is likely to yield immediate strategic gains,while commercial considerations are most likely to follow in a not-too-distant future.India could consider investing in areas like automobiles,pharma,textiles and food processing ,tea,rice,spices etc.India also keen to invest in IT and Business management.

New Delhi-30/12/2014

ANIL KUMAR UPADHYAYA