Why is it in the news?

• India and Iran signed a 10-year contract for the operation of the Chabahar port’s Shahid Beheshti terminal.

More about the news

• The agreement was signed between Indian Ports Global Ltd. (IPGL) and Iran’s Port and Maritime Organisation (PMO).
• IPGL will invest around $120 million to equip and operate the port.
• India has offered a credit window equivalent to $250 million for projects aimed at enhancing Chabahar-related infrastructure.
• This agreement comes eight years after the general framework of cooperation on the Chabahar port was concluded. 

India’s stakes in Iran’s Chabahar port are multifaceted and significant, both strategically and economically.

Strategic Importance:

• Chabahar port provides India with a crucial foothold in the region, offering access to Afghanistan, Central Asia, and beyond.
• This strategic significance is amplified by its proximity to Pakistan’s Gwadar port, which is operated by China and could potentially pose challenges to India’s regional influence.

Alternative Route to Afghanistan:

• Historically, India’s land access to Afghanistan has been limited due to the hostile relationship with Pakistan.
• Chabahar port offers an alternative route, bypassing Pakistan, thereby ensuring a more secure and reliable means for India to engage with Afghanistan economically and strategically.

International Connectivity:

• Through Chabahar, India aims to bolster its connectivity with Central Asia and Europe. The port serves as a gateway for trade and transit, facilitating smoother movement of goods between India, Iran, Afghanistan, and beyond.
• This aligns with India’s broader vision of enhancing its presence in the global trade network.

Counterbalancing Chinese Influence:

• India’s investment in Chabahar can be seen as a strategic move to counterbalance China’s growing influence in the region, particularly through its Belt and Road Initiative (BRI).
• By developing Chabahar as an alternative trade route, India aims to mitigate China’s dominance and assert its own geopolitical interests.

Infrastructure Development:

• India’s investment in Chabahar includes not only the operation of the port but also infrastructure development projects in the surrounding areas.
• This investment not only enhances India’s economic engagement with Iran but also contributes to the socio-economic development of the region, fostering goodwill and cooperation.

Integration with Larger Connectivity Projects:

• Chabahar’s development is closely linked with the International North South Transport Corridor (INSTC), a major multi-modal transportation route connecting the Indian Ocean with the Caspian Sea and beyond.
• Integrating Chabahar with the INSTC enhances its commercial and strategic viability, further augmenting India’s connectivity with Russia and Eurasia.