India signs deal with Iran to use Chabahar port. This is an important signal towards Tehran. How will the US react?

India recently signed a 10-year agreement with Iran to manage the Chabahar port, marking the first time India has taken over management of a port abroad. The agreement underscores India's strategic importance to the port, which is a key link to Afghanistan, Central Asia and the wider Eurasian region.

Advertisement

The move – in the midst of a busy election season – is also seen as a significant rapprochement with Iran, with the potential to have significant repercussions across the region. The project aims to enhance India's regional connectivity and relations with Afghanistan, Central Asia and Russia, write it Economic Times.

This is the first time that India has taken over the management of a foreign port. The port, considered India's most important link to Afghanistan, Central Asia and the wider Eurasian region, will help match Pakistan's Gwadar port and other similar ports. Gwadar Port and associated New Silk Road (Belt and Road Initiative) from China.

Balancing cooperation between China and Pakistan

The contract was signed by someone on the Indian side state companyThat India Global Harbor Ltd., which was established specifically to operate Chabahar. On the Iranian side, state authorities are responsible for ports and maritime affairs Iranian Ports and Maritime Organization.

India has invested several million US dollars in port expansion. An additional $85 million was promised in the agreement. How important this project is for Delhi is also evident from the fact that leading politicians in Delhi are joining in on this issue.

In this context, Indian Foreign Minister Subrahmanyam Jaishankar emphasized that India hopes for a “long-term agreement” with Iran. “Once the long-term agreement is finalized, the path will be clear for major investment in the port,” said S. Jaishankar, according to the Economic Times.

Long-term agreements are a prerequisite for industrial and logistics companies to transform their supply chains in the long term. The India-Iran agreement will be extended automatically after ten years.

US sanctions

The first agreement on Chabahar was reached in 2016 during Modi's visit to Iran, but was not fully implemented. The US thwarted it with threats of harsh sanctions. This time too, the US made it clear on the day of signing threatened.

Any company, anyone considering doing business with Iran, needs to be aware of the potential risks they face and the potential risks of sanctions.

Vedant Patel, deputy spokesman for the US Department of State

However, times have changed since then and India in particular has gained strategic freedom compared to the United States. This project will not only open a new trade route that saves two weeks compared to the route through the Suez Canal. This port will also be of great benefit to Indian traders and investors interested in Central Asia.

To realize this plan, a 750-kilometer railway line has been built since 2020 between Tschahbahar and Zahedan, which is close to the Afghan border. Once the line is completed, the port will be connected to the Iranian railway network, from where there are connections to the Central Asian railway network (Turkmenistan, Kazakhstan).

Interface to Central Asia and Russia

Additionally, Iran's railway network is currently connected to the North-South International Transport Corridor (North-South International Transport CorridorINSTC) connected. INSTC is Russian Projectwhich envisions a logistics corridor from Mumbai to St. Louis. St. Petersburg.

However, India faces competition in this project from China, which uses Pakistan's Gwadar port as the terminus of the China-Pakistan Economic Corridor (CPEC) as part of the New Silk Road. Pakistan is also trying to persuade Central Asian countries to use the port of Karachi as a gateway to the Indian Ocean region.

Once again it becomes clear that BRICS+ is not acting as a bloc at all, but is pursuing different goals. However, this encourages rather than hinders international business.

Competition within BRICS stimulates business

India has been on an investment offensive for some time. In Myanmar, India also operates a port in Sittwe, but operations were disrupted by civil war very affected.

And at the end of last year, an Indian billionaire went to the Israeli port of Haifa purchased. However, it is doubtful that it will fly high plan must be realized to connect India, the Arab world and Europe through Israel.