New Delhi, May 13 -- India's foreign ministry confirmed on Monday that the country has signed a pact to make southern Iran's Chabahar Port a transit hub under the International North-South Transport Corridor (INSTC) for "10 years". This is in a bid to diversify its trade routes and bypass Pakistan's denial of land access to Afghanistan and Central Asia. It holds significant promise for India's trade potential with European countries, boasting a shorter route to Europe compared to the traditional Suez Canal route. Industry estimates suggest that shipments through the INSTC route could be expedited by 15 days.
Earlier in March, a delegation led by Joint Secretary (PAI) JP Singh engaged in discussions with Afghan officials, including Taliban Foreign Minister Amir Khan Muttaqi, regarding Afghan traders' utilisation of the Chabahar port. The talks, held in Kabul, also covered a spectrum of issues, including bilateral relations, economic cooperation, and India's ongoing humanitarian assistance efforts in Afghanistan.
India has invested in developing the strategically located Chabahar Port in southeastern Iran. This port, situated at the mouth of the Gulf of Oman, not only offers India an alternative route for trade but also serves as a vital link in the proposed International North-South Transport Corridor (INSTC), connecting the Indian Ocean and the Persian Gulf to the Caspian Sea and onward to Europe via Russia.
A memorandum of understanding (MoU) for the development of Chabahar Port was signed in May 2015, with the contract executed in May 2016, marking India's commitment to invest $85 million in the development of the Shahid Beheshti terminal. However, the overall Indian exposure to the project is estimated at $500 million, highlighting its substantial importance.
The strategic significance of the Chabahar Port gained further traction as China commenced the development of the Gwadar Port in Pakistan as part of its Belt and Road Initiative. This competition underscores the port's critical role in India's outreach to Iran and Afghanistan, potentially alleviating Iran's burden amidst Western sanctions and aiding landlocked Afghanistan in reducing its dependency on Pakistan for ocean access.
Despite its strategic importance, the development of the Chabahar Port has faced numerous hurdles. Operationalized by India Ports Global Limited (IPGL) under a short-term agreement, the port's progress has been hindered by periodic renewals and geopolitical tensions, particularly Iran's strained relationship with the United States and subsequent sanctions.
Furthermore, this is an important development amid tensions between Iran and Pakistan, which increased earlier this year, raising concerns about a possible conflict spreading from the Middle East to South Asia. In January, Iran attacked alleged strongholds of a militant group called Jaish al-Adl in Pakistan's Baluchistan province. Two days later, Pakistan responded with air strikes on targets in Iran's Sistan-Baluchistan province, aiming at safe havens of the Baluchistan Liberation Army and Baluchistan Liberation Front. Both sides claimed civilian casualties. This shows that Iran's actions towards Pakistan aren't directly linked to its Middle Eastern actions. Neither country wants a bigger conflict; Iran is dealing with multiple challenges, while Pakistan faces economic difficulties and prepares for an upcoming election.
Further, negotiations for a long-term agreement for the operation and management of Chabahar Port have been stalled for various reasons, including disagreements over arbitration frameworks. While recent developments suggest progress in resolving contentious clauses, including arbitration, challenges persist due to geopolitical complexities. As India endeavours to solidify its position in the region and establish Chabahar as a pivotal trade hub, navigating through geopolitical obstacles remains imperative for the port's sustained development and realisation of its full potential.
Published by HT Digital Content Services with permission from Millennium Post.