India Weighs Running Phase 1 of Chabahar Port

India’s presence in the strategically located Iranian port of Chabahar—New Delhi’s primary gateway to landlocked Afghanistan—is all set to get a big boost.

Tehran has recently proposed to New Delhi to manage Phase 1 of the port built by Iran even as the two sides are still negotiating terms and conditions of Delhi’s role in expanding Phase 2 of the port where the government wants to invest $235 million, the Indian newspaper The Economic Times reported on its website.

Iran has offered India management rights for two years for Phase 1 of the port and such rights could be renewed by another decade, the paper reported.

But port management proposal is not just only development concerning Chabahar Port, as there will be hectic activities with a trilateral meeting being planned among Iran-India-Afghanistan on the operation of Chabahar Port in May. Last year, the three sides had signed an agreement for operation of Chabahar Port.

Besides, a summit to attract investments for the Special Economic Zone in the port complex will be held mid-May in Iran. New Delhi-Kabul-Tehran could also hold trilateral consultations on the future of Afghanistan soon with Indian Foreign Secretary S. Jaishankar planning to visit Tehran in the future close on the heels of consultations organized by Moscow on dealing with the Afghan situation.

Incidentally, these meetings in Iran are expected to held ahead of the May 19 presidential polls where the incumbent Rouhani is seeking reelection.

India’s allotment of $235 million for Phase 2 of Chabahar is divided into two parts—$150 million line of credit from the EXIM Bank for development of port complex and $85 million—allotted after the contract was signed by the two sides for the supply of equipment to develop two berths in the port complex.

A Special Purpose Vehicle has been created by the Indian Shipping Ministry for the development of Phase 2 of the port. On the Iranian side, Ports and Management Organization is the nodal authority for implementing the project. India has been given the rights to operate two berths and few terminals in Phase 2 of the port.

Adani Ports & Special Economic Zone Ltd., operator of India’s largest port, and Essar are among companies that have expressed an interest in managing and operating two terminals at Chabahar.

JM Baxi Group, known in India for its chartering, broking and other shipping services, has also shown interest. The India Ports Global Limited, the company mandated to drive India’s investments overseas, on March 17 invited firms to express interest if they want to be considered for a strategic partnership.

India has been negotiating with Iran for releasing an initial tranche of $150 million ever since the MoU was signed during Shipping Minister Nitin Gadkari’s visit to Tehran in May 2015 weeks before Iran signed the landmark nuclear deal with the global powers.

The contract between the two countries for developing the port—that will rival Pakistan’s Gwadar Port—was finalized when the Indian Premier Narendra Modi visited Tehran in May 2015.

This strategic port will allow India to circumvent Pakistan and access Afghanistan and Central Asia directly via sea. India is also constructing a railroad between Chabahar and Zahedan to connect the port to rest of the Iranian rail network.