The road ahead for Indian operations at Chabahar port in Iran

The two countries inked the 10-year pact on operations at Shahid Beheshti terminal of Chabahar port in Tehran on May 13. Besides a commitment to invest $120 million to acquire equipment for port operations, India offered a credit window of $250 million for developing infrastructure around the deep-sea port in the Gulf of Oman. A focus area for both sides now will be the acquisition of equipment and machinery that can boost operations at Shahid Beheshti terminal, which is operated by a subsidiary of State-run India Global Ports Limited (IGPL), the people cited above said on condition of anonymity. These efforts have been hampered in the past by US sanctions on Iran, they said.

The Indian side will procure equipment such as mobile harbor cranes, rail mounted quay cranes, rubber tyred gantry cranes, reach stackers, forklifts and pneumatic unloaders as part of its commitment to invest $120 million. This amount includes an initial Indian commitment to invest $85 million when the original framework agreement on Chabahar was signed in 2016.

“Iran has a lot of experience in dealing with sanctions and it is capable of coming up with customised solutions that will help joint efforts by both countries to acquire equipment,” one of the people cited above said.

The two sides are also looking at the possibility of making greater use of Chabahar port for moving goods between India and Russia, the people said. “Chabahar port is all about the trans-shipment of goods and if one talks of trans-shipment, Russia is one of the most important destinations,” a second person said.

Iranian ambassador Iraj Elahi said the immediate priority for Iran is ensuring that both sides take steps to enhance the volume of cargo handled by the port.

“Steps must be taken to bring in heavy equipment such as cranes. Simultaneously, more cargo from India must be pushed towards Chabahar. India must be committed to making greater use of Chabahar for transit, instead of other Iranian ports such as Bandar Abbas or Khorramshahr,” Elahi told HT. “Simultaneously, both sides have to implement other projects to enhance the infrastructure, such as connecting Chabahar to the railway network,” he said.

Hours after the India-Iran agreement was signed, the US state department warned that all entities considering business deals with Iran faced the “potential risk of sanctions”. The US also said there was no exemption from its sanctions for the India-Iran pact. External affairs minister S Jaishankar responded to the stance adopted by the US by saying a “narrow view” shouldn’t be taken of the Chabahar project as it will benefit the entire region.

In 2018, the US provided an exception from sanctions under the Iran Freedom and Counter-Proliferation Act of 2012 for the development of Chabahar port. At that time, the US had a significant presence in Afghanistan and its decision was influenced by the port’s potential for facilitating trade and development in the war-torn country.