The strategic port of Chabahar in southeastern Iran has a special place in the country’s “looking to the East” strategy and can link India to Central Asia, the Caucasus, and the Persian Gulf littoral states.
Chabahar Port as Iran's only ocean port on the Makran coast is not only important for India's geopolitical interests in West Asia, but it can also play a key role in pulling Afghanistan out of its current geographical impasse and provide India with easy and inexpensive access to its new neighbors.
In addition, the port's importance has doubled for India due to China's efforts to increase its influence on India's neighbors. China is trying to limit India's sphere of influence in Pakistan by launching the "One Belt-One Road" initiative and investing in the Pakistani port of Gwadar. It was with this in mind that New Delhi decided to make a lofty investment in Chabahar port.
In December 2018, India Ports Global Limited set up an office in the port of Chabahar and took over the construction of the port of Shahid Beheshti in this city. The port could maintain and strengthen India's ties with Afghanistan and Central Asia.
The basis of Iran-India relations, based on "welfare through strengthening relations", focuses on bilateral cooperation in the fields of energy, trade, communications, and developing trade relations between the two countries. Iran and India, along with Afghanistan, have signed a tripartite agreement to develop the port of Chabahar.
Iran plays a vital role in helping India become an emerging global power. These bilateral relations with Iran are not only essential to India's economic interests but will also play a significant role in the development of New Delhi's influence on its new neighbors in the Persian Gulf and Central Asia.
The importance of Chabahar in regional equations
The success and failure of the Chabahar development project is so much intertwined with the region's transnational equations that President Donald Trump's administration, at the peak of its unprecedented resilience to undermine Iran's economy, said it was exempting the port's development from its comprehensive sanctions regime. The US Department of State said the port's role in Afghanistan's economy and development was the main reason for the exemption.
The US Department of State’s decision to exempt Chabahar was a sign that the port had a special place in regional and global relations. How was this position obtained and why did Chabahar become so important?
Chabahar, the first deep-water port in Iran
A simple, yet highly important reason, is that the development of Chabahar port will make it the first deep-water port in Iran.
Deep-water ports are the result of a revolution in shipping industries, which has allowed huge cargo ships to carry and transfer hundreds of containers at a very low cost. It is not possible to load or unload these ships in any other type of port, and it requires special equipment.
Iran currently does not have a deep-water port. That's why one way for Iran to get access to international trade is for these ships to enter the Persian Gulf and then unload their cargo in the United Arab Emirates. The port of Jebel Ali in the UAE is one of the two ports in the Persian Gulf with this feature (Saudi Arabia's Dammam port is also a deep-water port).
Ultimately, the construction and development of the port of Chabahar will eliminate the need for relying on the UAE for international trade. Furthermore, Chabahar, contrary to Bandar Abbas, is located outside the troubled region of the Persian Gulf and out of the reach of Iran's regional and global enemies. The port of Chabahar is the only port in Iran that has direct access to the Indian Ocean.
The vulnerability of Iranian ports in the Persian Gulf during the Imposed War (1980-88) clearly demonstrated the strategic importance of Chabahar's development. Finally, at the end of the war and at a time when the Iranian government was trying to open the door to a policy of de-escalation and normalization of relations, one of the first free trade zones was established in Chabahar in 1992.
Chabahar, the golden gate of India's trade with the world
Chabahar's importance to India is so serious that it has been pursuing the development of this southern Iranian port for nearly three decades. In fact, the development of the Chabahar project is far beyond the motive of increasing trade relations and exports to Iran.
India's first challenge is to compete with China and Pakistan's strategic alliance and find an alternative for the port of Gwadar. Gwadar is practically the Pakistani “sister port” of Iran’s Chabahar and is located on the other side of the border in Pakistan's Balochistan. The distance between the two ports is 170 km, and China plays the same role in Gwadar as India does in Chabahar. Like Chabahar, Gwadar will become a deep-water port.
For India, Chabahar is also a key point in its ambitious project “The International North-South Transport Corridor”. The agreement has been waiting for a miracle since 2000 to pave the way for a new trade and communication link that would connect India to the north via the Chabahar Pass.
Reducing India’s export costs
According to experts, India’s exports to Central Asia, the Caucasus and even Russia through the port of Chabahar saves about a third of the cost and time of transporting goods to these countries, and this factor can play a role in lowering the prices of the Indian goods.
The Indian Minister of Shipping, Mansukh L. Mandaviya, recently announced that with the development of the port of Chabahar, India can save up to 20% on the shipping and logistics costs of sending containers to the Commonwealth of Independent States in Central Asia.
He added, "Until now, India has had indirect access to the Commonwealth of Independent States in the Central Asian region only through Europe.”
Commonwealth of Independent States includes Armenia, Belarus, Azerbaijan, Kazakhstan, Kyrgyzstan, Russia, and Uzbekistan.
The Indian Minister of Shipping said that " In a strategic development, loading and unloading of cargo has started at Chabahar Port. Container transport logistic costs to CIS countries will be reduced by 20 percent through Chabahar. So far, cargo to CIS countries from India could be sent only via China or Europe.”
"If we want to send containers to CIS countries we can only send via Europe or China. There was no other connectivity with CIS countries. Now, we have developed Chabahar port and there is direct connectivity to these countries via Afghanistan," he added.
“The export of container shipments to Afghanistan, which began in February 2019, has been on the rise. Chabahar port is significantly expanding its activities. Last week, 39 refrigerated and ordinary containers were loaded to India from Afghanistan. This is a milestone in the growth path of Chabahar Port,” the Indian minister further stressed.
India welcomes the establishment of an FTZ in the port of Chabahar
India welcomed the establishment of a free trade zone in the port of Chabahar last week, to which Iran has agreed. In this regard, a memorandum of understanding was signed between the Ports and Maritime Organization of Iran and officials from the Free Trade Zone to implement the rules and regulations of the free trade zones in the port of Chabahar.
Arun Kumar Gupta, Chief Executive of India Ports Global Organization, said that setting up a free zone in Chabahar port will increase the transportation of goods and cargo in this port.
Director-General of Sistan and Baluchestan Ports and Maritime Organization Behruz Aghaei also said that for the first time and under a tripartite agreement between India, Afghanistan, and Iran, a transit cargo was sent from the port of Shahid Beheshti in Chabahar to India.
“Hazel container ship was loaded with 30 refrigerated containers and nine ordinary containers, all of which contained transit cargo from Afghanistan to the Indian ports of Mundra and Nhava Sheva, as well as 28 empty containers,” he added.
India’s investment in Chabahar port
In its 2021-2020 budget plan submitted to parliament, the Indian government doubled its budget for the Chabahar port project compared to last year, and observers are waiting for India's decisions to be implemented as quickly as possible.
The Print newspaper wrote on Sunday that “In the budget announced for the Indian Ministry of Foreign Affairs, 100 crore rupees (roughly one billion rupees or 14,010,000 dollars) have been considered for the development of Iran's port of Chabahar.”
The increase in the budget for Chabahar port project, at a time when tension between Iran and the United States is high, indicates the importance of the project for India, as well as New Delhi's commitment to completing the Chabahar port.
The United States has exempted the development of Chabahar port from sanctions. In December last year, Indian media reported that the US had provided India with a written guarantee according to which India could purchase equipment for the port of Chabahar.
Finance Minister of India, Nirmala Sitharaman, after meeting with US Treasury Secretary Steven Manuchehr in New Delhi in December 2019, announced that India needed the Iranian port of Chabahar to continue trade with Afghanistan.
Iran's Chabahar port is of great importance to India for various reasons, the most important of which is the port’s strategic location. Due to its disputes with neighboring countries, including Pakistan and China, India has decided to create a new route to access West and Central Asian countries and expand its interests in landlocked Afghanistan.
The first phase of the port was inaugurated in December 2017 in the presence of Iranian President Hassan Rouhani and representatives from India and other countries in the region.
The port of Chabahar, located in the Sea of Oman, facilitates India's access to Afghanistan by sea. The Indian government has pledged to invest $500 million in the development of Chabahar, as well as $1.5 billion to build a series of roads and railways there.