India signs 10-year pact with Iran over Chabahar port

India on Monday entered into a bilateral agreement with Iran to operate the Chabahar port for the next decade. The pact, signed in the presence of Union Minister for Ports and Shipping Sarbananda Sonowal and Iranian Minister for Roads and Urban Affairs Mehrdad Bazrpash, is an important step for India as it grants access to Afghanistan and other Central Asian countries and at the same time serves as an alternative to China's Belt and Road Initiative.

The long-term bilateral contract for Chabahar Port Operations was signed between Indian Ports Global Limited (IPGL) and the Port & Maritime Organization (PMO) of Iran. This agreement aims to improve regional connectivity and facilitate trade, particularly between India, Iran and Afghanistan. It is to be noted that India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, facilitated the first shipment of exports from Afghanistan to India in 2019. Operations continued through short-term contracts while negotiations for the long-term agreement continued alongside.

“Today is a historic day for the region's maritime sector as India and Iran have signed this long-term agreement on Chabahar Port, ushering in a new era of trade, maritime cooperation and transshipment, while enhancing trilateral trade between India, Iran and Afghanistan.” “India continues to invest in Chabahar Port, further increasing its efficiency and capacity and strengthening India's commitment to the economic development of the region,” Sonowal said while signing the agreement.

“The importance of Chabahar port goes beyond its role as a mere conduit between India and Iran. It serves as an important trade artery connecting India with Afghanistan and Central Asian countries. This connection has opened new avenues for trade and strengthened supply chain resilience across the region.” Under the leadership of Prime Minister Shri Narendra Modi, India is on its way to becoming a major maritime player with an impressive supply chain network. Establishing regular ship calls between Chabahar port and Indian ports has provided stability and confidence to traders with transparency and predictability in their supply chain operations,” Sonowal added.

Located in Sistan-Baluchestan province on the southwest coast of Iran, the port is an important point on the Arabian Sea with easy access from the west coast of India. Kandla port in Gujarat is the closest to Chabahar port at 550 nautical miles while the distance between Chabahar and Mumbai is 786 nautical miles.

Since 2019, container traffic of more than 80,000 TEU as well as bulk and general cargo of more than 8 million tons have been handled. Its strategic importance can be seen from the fact that it provides an alternative transit from the Strait of Hormuz for freight traffic between Central Asian countries and Afghanistan. This diversification strengthens India's strategic position in the region.

Sybil Alvarez

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