India and Iran sign 10-year deal for operating Chabahar port, raises eyebrows in US

Team India Sentinels Monday 13th of May 2024 02:33 PM

The Chabahar port. (Creative Commons photo via Wikipedia)

New Delhi: India and Iran have signed a 10-year contract to develop and operate the strategically important Chabahar port. The long-term agreement was signed between Indian Ports Global Limited (IPGL) and Iran’s Port & Maritime Organization.

The Chabahar port, located on Iran’s southeastern coast along the Gulf of Oman, is seen as a pivotal trade route to the landlocked Central Asian republics. This initiative aims to create alternative trade routes bypassing Pakistan’s Karachi and Gwadar ports.

The Union minister of ports, shipping and waterways, and AYUSH, Sarbananda Sonowal, visited Chabahar, Iran, to witness the signing ceremony. He highlighted the port’s strategic importance beyond facilitating India-Iran trade, serving as a critical trade conduit for India to connect with Afghanistan and Central Asian countries.

The intention is to link Chabahar with the International North-South Transport Corridor (INSTC), creating a pathway from India to Russia via Iran. This port offers India an alternative route to reach Afghanistan and Central Asia, avoiding Pakistan.

According to Iran’s minister of roads and urban development, Mehrdad Bazrpash, IPGL will inject approximately $120 million into the port’s development, alongside an additional $250 million in financing, making the contract’s total value reach $370 million.

US not amused

However, the move has drawn attention from the United States. Hours after the agreement was signed, the US issued a warning to “anyone” considering business deals with Iran. The US sanctions on Iran are still in place, and Washington has stated it will continue to enforce them.

In reply to a question, a US state department deputy spokesman, Vedant Patel, said: “We are aware of these reports that Iran and India have signed a deal concerning the Chabahar port. I will let the government of India speak to its own foreign policy goals vis-a-vis the Chabahar port as well as its own bilateral relationship with Iran.”

On being asked if the US would sanction Indian companies after it signed deal with Tehran, Patel said, “Broadly, you have heard us say this in a number of instances, that any entity, anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions.”

Despite the potential risk of US sanctions, India remains committed to the Chabahar port project. The port has already facilitated the shipment of 2.5 million tonnes of wheat and 2,000 tonnes of pulses from India to Afghanistan.

This deal marks a significant milestone in India-Iran relations and is expected to bolster trade links and supply chain resilience across the region.


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