Domestic Economy

India Signs Ambitious Deals to Develop Chabahar

India Signs Ambitious Deals to Develop Chabahar
India Signs Ambitious Deals to Develop Chabahar

New Delhi signed a dozen agreements with Tehran on Monday, including three to develop the strategic port of Chabahar along the southern coasts of Iran.

The agreements were signed in the presence of visiting Indian Prime Minister Narendra Modi and Iran's President Hassan Rouhani in Tehran, IRNA reported.

Modi arrived on Sunday evening, at the helm of a high-level delegation of Indian politicians, businesspeople and cultural dignitaries.

After arriving in Tehran, the premier tweeted in Persian, "Reached Iran, a land with whom India shares civilization ties. Hope to enhance economic partnership between our nations."

His visit, the first by an Indian prime minister in 15 years, coincides with that of Afghan President Ashraf Ghani who landed in the Iranian capital on Monday.

"Chabahar can become a very big symbol of cooperation between Iran and India," Rouhani said in a joint press conference with Modi after the signing of agreements.

"Chabahar can serve as a point of connectivity between different countries, especially India and Afghanistan," he added.

Modi said the agreement to develop Chabahar Port, for which India will provide $500 million, is a key milestone.

> "Dosti" as Old as History

Modi said India and Iran are not new friends. "Our 'dosti' is as old as history," he said, using the Farsi word for friendship.

"The outcomes and agreements signed today open a new chapter in our strategic partnership."

India is to invest billions of dollars in setting up industries—ranging from aluminum smelter to urea plants—in Iran's Chabahar Free Trade Zone, according to The Times of India.

The signing of a commercial contract to build and run the strategic port of Chabahar will help India gain a foothold in Iran and win access to Afghanistan, Russia and Europe, thus circumventing Pakistan, road transport, the daily quoted Indian's Highways and Shipping Minister Nitin Gadkari, who was also in Tehran, as saying.

"The distance between Kandla and Chabahar Port is less than the distance between New Delhi and Mumbai; so what this agreement does is to enable quick movement of goods first to Iran and then onwards to Afghanistan and Russia through a new rail and road link," he added.

"Over Rs.1 lakh crore (about $14.8 billion) investment can happen in Chabahar Free Trade Zone," he said.

Iran, Gadkari said, has cheap natural gas and power that Indian firms are keen to tap to build a 0.5-million-ton aluminum smelter and urea manufacturing units.

"We spend Rs.45,000 crore ($6.6 billion) annually on urea subsidy, and if we can manufacture it in Chabahar Free Trade Zone and move it through the port to Kandla and onward to hinterland, we can save that amount," he said.

Gadkari said Nalco will set up the aluminum smelter while private and cooperative fertilizer firms are keen to build urea plants, provided they get gas at less than $2 per mmBtu.

"Railway PSU IRCON will build a rail line at Chabahar to move goods right up to Afghanistan," he said.

Gadkari said India Ports Global Pvt. Ltd., a joint venture of Jawaharlal Nehru Port Trust and Kandla Port Trust, will invest $85 million on developing two container berths with a length of 640 meters and three multi-cargo berths.

The Indian consortium has signed the port pact with Aria Banader Iranian.

"The contract is for 10 years and can be extended. We will take 18 months to complete phase one of the construction," he said, adding that the first two years of the contract are grace period where India does not have to guarantee any cargo.

From the third year, India will guarantee 30,000 TEUs of cargo at Chabahar Port, which will go up to 2,50,000 TEUs by the 10th year.

> Historic Event, New Era of Development

A pact to develop Chabahar Port was first inked during the Atal Bihari Vajpayee's government in 2003, but the deal slipped through during subsequent years. It has been aggressively pushed in the past one year, leading to the signing of the agreement for phase-1 today, Gadkari said.

"This is a historic event which will herald in a new era of development. We can now go to Afghanistan and further to Russia and Europe without going through Pakistan," he said.

The Zaranj-Delaram Road constructed by India in 2009 can give access to Afghanistan's Garland Highway, setting up road access to four major cities in Afghanistan: Herat, Kandahar, Kabul and Mazar-i-Sharif.

India is also reported to finance another road network inside Afghanistan to enable Iran to access as far as Tajikistan through a shorter route.

Chabahar is about 100 km from the Chinese-run Gwadar Port in Pakistan, which is part of China's $46 billion plan to develop China-Pakistan Economic Corridor aimed at opening new trade and transport routes across Asia.

The Indian joint venture company will invest more than $85.2 million on the port's development. India's Exim Bank will provide a credit line of another $150 million.

India is blocked from land access to Afghanistan and through it to the Central Asia countries because of opposition from Pakistan, which sees India's expansive diplomacy in the region as a threat.

Later on Monday evening, a trilateral pact among India, Iran and Afghanistan on developing transit routes was to be inked with Afghan President Ashraf Ghani in attendance.

Road and rail links are being built so that the landlocked Afghanistan can get access to the Iranian port as an alternative to the Pakistani port of Karachi.

> Other Agreements

Other agreements signed on Monday in the presence of Modi and Rouhani included those in the areas of science and technology, culture and railroads.

An MoU between India's External Affairs Ministry and Iran’s Ministry of Foreign Affairs seeks to create a joint secretary/director general policy dialogue as well as encouraging new institutional mechanisms between think tanks on both sides, The Financial Express reported.

Another agreement was signed to extend the cultural exchange program between the two countries for 2016-19 covering the areas of culture and arts, radio, TV, mass media and cinema.

An MoU between India's Foreign Services Institute of the External Affairs Ministry and the School of International Relations of Iran’s Ministry of Foreign Affairs is intended to enhance cooperation between the two parties for training diplomats and the exchange of eminent speakers.

An implementation protocol between India’s Department of Science and Technology under India's Ministry of Science and Technology, and Iran’s Ministry of Science, Research and Technology fleshes out the specific cooperation between the two sides pursuant to the 2003 MoU and covers areas like exchange of experiences, seminars and conferences.

An MoU between the Indian Council for Cultural Relations and Islamic Culture and Relations Organization of Iran provides for institutional mechanisms and modalities for cooperation.

An MoU between the Export Credit Guarantee Corporation of India and the Export Guarantee Fund of Iran seeks to establish a framework of cooperation between ECGC and EGFI in supporting and encouraging foreign trade and investment between India and Iran.

Where appropriate, it will facilitate the supply of goods and services from their respective countries to a third country.

The aim of another MoU between the National Archives of India and Iran's National Library and Archives Organization is to help exchange information and knowledge in the field of archival matters through the exchange of manuals, guidelines, rules, publications and other special literature on archival topics.