India and Iran Forge Ahead with Chabahar Port Development
India and Iran are making significant progress towards finalizing a long-term contract that outlines New Delhi’s investments in the strategically important Chabahar Port. In recent talks held between senior officials and diplomats from both nations, most of the lingering issues impeding the port’s development have been successfully addressed. The remaining concerns are expected to be resolved in the upcoming weeks when Indian officials visit Iran.
The swift pace of negotiations reflects India’s eagerness to expedite the completion of the port, particularly amidst shifting geopolitical dynamics and China’s expanding influence. Located in southern Iran, the Chabahar Port holds immense potential as it will be connected to the International North South Corridor. Its strategic position establishes a direct link for Mumbai to landlocked Central Asian countries and offers an advantageous opportunity to develop the port as a transshipment hub, given its proximity to some of the busiest global trade routes.
According to Iranian media reports, Ali Akbar Safaei, the chief of the Iranian Ports and Maritime Organization, confirmed that talks regarding the port’s development were conducted between June 12 and 16. Once all outstanding issues are resolved, a long-term agreement aimed at advancing the port’s infrastructure will be signed.
Delays in the construction of the port arose due to various challenges encountered by both countries. However, with the memorandum of understanding among Iran, India, and Afghanistan, an initial investment of $25 million has already been committed to Iran for the port’s development, as stated by Safaei.
In May, India’s National Security Advisor Ajit Doval visited Tehran and held discussions with Iranian President Ebrahim Raisi, who emphasized the importance of elevating India-Iran relations to new heights, particularly in economic and commercial spheres. Despite initial obstacles, India and Iran are now revitalizing their ties. Notably, India recently transported wheat to Afghanistan via the Chabahar Port, signaling a positive turn in relations between the two countries, according to analysts.
Furthermore, in a significant move, the Reserve Bank of India approved the use of the rupee as a payment mechanism for trade with sanctions-hit Iran. India had suspended imports from Iran in 2019 following the reinstatement of US sanctions on the oil-rich nation. “We are considering a long-term rupee trade not only with Russia but also with Iran,” stated Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister.
Bilateral trade between India and Tehran stood at $17.03 billion in the 2018-19 fiscal year. However, it significantly dropped to $1.9 billion in 2021-22. In response, both countries are actively exploring avenues to boost non-oil trade and reverse this decline.
