OpinionsScripting the Chabahar chapter

Scripting the Chabahar chapter

Date:

DP Srivastava

Prime Minister Narendra Modi's recent visit to Iran has been historic in many ways. The visit concluded with the signing of a contract on the Chabahar port development and a trilateral transit agreement between , Afghanistan and Iran.

Ever since the sanctions against Iran were lifted, there has been a flurry of high-level visits to Tehran. However, India's case is different. We never left Iran. We maintained a spectrum of relations with it. India was the second largest buyer of Iranian crude oil during the sanctions period, even though the volume came down. This required enormous efforts and sacrifices by both sides.

In absence of normal channels, we re-invented banking, insurance and shipping arrangements which were closed due to sanctions. Since then, our crude purchase from Iran has seen a rise. Recovering their market share for crude exports was a priority for the Iranian Government.

Meanwhile, there has been a consensus on India's engagement with Iran and its participation in the Chabahar port. This has been followed by successive Governments even when Iran was under sanctions. The Modi Government had approved the investment decision in Chabahar port way back in October 2014, when the fate of Iran's nuclear deal was by no means certain.

Union Minister for Road Transport & Highways Nitin Gadkari visited Iran to sign the Memorandum of Understanding on India's participation in the Chabahar port in May 2015. This too was before the nuclear deal was finalised in July 2015. In the run-up to Modi's visit to Iran, Union Minister for External Affairs and Petroleum Minister Dharmendra Pradhan made trips to Iran.

Noteworthy is the fact that India was offered participation in the Chabahar port during former Prime Minister Atal Bihari Vajpayee's term when former President of Iran Mohammad Khatami visited India in 2003. But the contract has been signed during Modi's term which is a major step forward as he has added two new dimensions which will reinforce and strengthen the port project.

Modi has offered finance to the tune of $1.6 billion for the Chabahar-Zahedan railway line which will improve hinterland connectivity to the port. There is also a possibility to invest in Iran's urea and petrochemical sectors. This will generate traffic for the port and is also in line with the priorities of the Iranian Government as it wants to develop the Chabahar free trade zone as the third largest petrochemical hub in Iran.

In addition, Prime Minister Modi has offered to increase India's financial commitment for the development of the Chabahar port. This is historic moment for the Indian port sector as this is the first time that major ports in India will invest in a port project overseas.

India relies heavily on overseas imports of several commodities such as urea and petrochemical intermediates  due to gaps in domestic demand and production. Chabahar will provide an opportunity to India to develop gas-intensive industries where end products have a strong market. They can be manufactured in Iran and exported easily to India through ports on the west coast, particularly in Gujarat ports.

The expansion of the Chabahar port has to dovetail with the priorities of the Iranian Government. Iran's President Hassan Rouhani mentioned that the recently signed India-Iran-Afghanistan transit agreement is also open to other countries. Modi mentioned inclusivity, not exclusivity and added that “this will be a corridor of peace and prosperity for our peoples. Motives of economic growth, and empowerment would drive it. It will build our security without making others vulnerable. It would break barriers among our nations and encourage new benchmarks of people-to-people contacts.”

The Chabahar port will not only allow access to Afghanistan, but also to Central Asia and Russia. It is directly south of Turkmenistan. There is already an excellent 1,000km road link connecting Chabahar with Mashhad and Sarakhs on Iran's tri-junction with Turkmenistan and Afghanistan. Participation in Chabahar can thus provide India vital access to mineral resources in Afghanistan through land route via Iran. It will also be a great opportunity for Indian industries to tap on the domestic demand in Iran and other ports in Central Asia.

A railway line running north from Chabahar can also provide a route for evacuating iron ore from Hajigak mine in Afghanistan. But this will require going beyond the Chabahar-Zahedan sector  which was committed during this visit to Mashhad and Sarakhs. This will also provide connectivity to Turkmenistan and CIS countries. There is an existing railway network connecting Turkmenistan to Kazakhstan, Tajikistan and Uzbekistan.

The proposed North-South Transport Corridor (INSTC) will offer transit to Russia and CIS countries. There already exists a rail line between Bandar Abbas port in the south and Amirabad port on the Caspian and Inchebarun on the Iran Turkmenistan border. The rail link between Kazakhstan-Turkmenistan-Iran was inaugurated by the Presidents of the three countries in December 2014.

Apart from Amirabad, there are two other ports on the Caspian-Bandar Anzali and Astara which are connected by road with Bandar Abbas.  There is a north-eastern trunk of this corridor which passes through Sarakhs on Iran's border with Turkmenistan. While substantial infrastructure exists for transit, Indian trade needs to make more use of it. Even during the sanctions period, INSTC was being used by UAE, CIS countries and China. Recently China has completed a 6,000km railway line from eastern China to Iran.

 

Chahabar free trade zone offers good opportunity for Indian investment in a urea plant which is a priority in a country where more than 60 per cent of the population works for the agricultural sector. Other energy intensive industries can also be set up in the Chabahar free trade zone. During Modi's visit, the National Aluminium Company Limited signed an MOU to set up an aluminium plant in Chabahar. If an attractive gas price is offered, this can bring substantial investment in the petrochemical sector. The Iranian side will have to ensure that rich gas is supplied to Chabahar.

Iran offers opportunities for investment in upstream oil and gas exploration. These were discussed during the visit of Pradhan to Tehran in April. Apart from Indian interest in Farzad-B, there would be other oil and gas blocks which may be offered in the next bidding round. We need to clear the oil payments to Iran. A beginning has been made. It is hoped that with more banking channels opening up, dues will be cleared soon.

The situation in Afghanistan-Pakistan region will be in a flux following the expected American withdrawal after 2017. India and Iran will have a major role in stabilising the situation. The port will expand Afghanistan's options. President Ashraf Ghani's presence at the signing ceremony for trilateral transport and transit agreement was an endorsement of the importance of Chabahar for the land-locked country, and India's participation in the expansion of the port. This is also in line with the priorities of the Iranian Government. Rouhani, after assuming office, during his visit to the province of Sistan-Balochistan, had stressed for the need to develop this region.

Moreover, the rise of the Islamic State also points to the need for cooperation amongst the countries in India's extended neighbourhood. India has an interest in the stability of the region which accounts for 60 per cent of our crude oil imports and a diaspora of more than six million to seven million. India can be a security provider.

India's bilateral relationship with Iran is not aimed at other countries. The visit has been a game changer. It has imparted enormous momentum which needs to be sustained by timely and focused implementation.

Northlines
Northlines
The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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