Chabahar will provide an alternative route and reduce transportation costs.

The decks have been cleared for India to lease and develop the strategically important Iranian port of Chabahar. This will provide an alternative route for India to trade with Afghanistan and Central Asia, bypassing Pakistan. The obstructions that the India-Iran agreement on the port had run into, after it was announced in May, got sorted last week during Iran Foreign Minister Javad Zarif’s visit, said Union Road Transport and Highways Minister Nitin Gadkari.

“The Prime Minister has spoken to the Iran government…. and 8 to 10 days ago the Iranian Foreign Minister came and met me… we have solved the problem,” Mr. Gadkari said without divulging details. Under the Memorandum of Understanding, Chabahar port will be used to ship crude oil and urea, greatly reducing transportation costs for importing these two commodities. The port is to be developed via a special purpose vehicle, which will be owned by the two sides with an investment of around $85 million. A multi-purpose cargo and container terminal is to be developed at the port.

India’s presence in Chabahar will offset the Chinese presence in the Pakistani port of Gwadar. It also takes advantage of the centuries-old connection with Iran, especially at a time when Iran’s economic sanctions are expected to be lifted, thanks to the nuclear deal it signed with the West. Weeks ahead of signing the MoU, the Iranian government had leased the port for upgradation to a private company, Aria Badaner. This put a question mark on the Indo-Iranian deal and caused alarm in Indian quarters as the agreement with Aria Badaner had taken place in March, while the MoU was signed in May between Mr. Gadkari and Iran’s Minister for Transport and Urban Development Dr. Abbas Ahmad Akhoundi.