India, Iran sign long term contract for operations at Chabahar Port to boost regional connectivity

In a significant milestone for the India-Iran relationship and to foster close cooperation to make Chabahar Port a regional trade transit and connectivity hub, the two countries on Monday signed a long-term contract for operating the Shahid-Beheshti Port Terminal in presence of Indian and Iranian Ministers.

The Indian delegation to Iran was led by Union Minister of Ports, Shipping and Waterways Sarbananda Sonowal, while Mehrdad Bazrpash, Minister for Roads and Urban Development, was present from the Iranian side.

During his visit to Tehran, Sonowal witnessed the signing of a new 10-year Contract between India Ports Global Ltd (IPGL) and the Ports & Maritime Organisation of Iran (PMO).

Under the Contract, IPGL will commit to further equipping and operating the port for the duration of the Contract. At the end of the 10-year period, both sides would further extend their cooperation in Chabahar.

IPGL will invest approximately 120 million USD in equipping the port. India has also offered an IN credit window equivalent to USD 250 million, for mutually identified projects aimed at improving Chabahar-related infrastructure.

The Chabahar Port is an India-Iran flagship project that serves as an important transit port for trade with Afghanistan and Central Asian countries, which are landlocked countries. India has been a key player in the development and operation of Chabahar Port.

The Indian government has invested in the port’s infrastructure and has been involved in upgrading its facilities to make it a viable transit route for Indian goods bound for Afghanistan and Central Asia.

In August 2023, Prime Minister Narendra Modi met with Iranian President Ebrahim Raisi in Johannesburg on the sidelines of the BRICS Summit.

Both leaders discussed the pending long-term Contract on Chabahar, and gave a clear political direction to finalise and sign the long-term Term Contract.

Speaking at the meeting, Sarbananda Sonowal called this a ‘historic milestone’ and stressed that it “symbolises the enduring trust and deepening partnership between India and Iran.”

“Today, India and Iran have reached a historic milestone in their longstanding relationship, driven by the visionary ideals of “Vasudhaiva Kutumbakam” championed by India’s Prime Minister Narendra Modi. Under PM Modi’s leadership, the momentous agreement that began on 23rd May 2016 is culminating today in a long-term contract, symbolizing the enduring trust and deepening partnership between India and Iran”, Sonowal said during his meeting with the Iranian minister Mehrdad Bazrpash.

“The Chabahar Port is an India-Iran flagship project. Today, as we witness the signing of the long-term contract for operating the Shahid-Beheshti Port Terminal, I am confident that a firm, sustainable, and long-term roadmap for developing the port has been established”, he added.

In August 2022, Sarbananda Sonowal visited Chabahar Port in Iran to review its work progress and handed over six mobile harbour cranes to Indian Ports Global Chabahar Free Trade Zone (IPGCFTZ) at the port then.

During his meeting, the Indian minister further underscored India’s vision of making the port an international hub of connectivity and how it has continued its outreach with regional countries to expand trade and transit through Chabahar Port.

“We have continued our outreach to promote the Chabahar Port and also facilitate transit. In 2022, India organized the “Chabahar Day” in Mumbai with a focus on fostering closer cooperation between our countries and the wider region to enhance inter-regional trade and economic connectivity,” he said.

Sonowal went on to say how this port is serving an important transit port with Afghanistan and Central Asian countries and how India has helped landlocked Afghanistan.

“Chabahar Port is serving as an important transit port for trade with Afghanistan and Central Asian countries, which are landlocked countries. Afghanistan is passing through a difficult phase. Over the past few years, we have supplied 85,000 metric tons of wheat and 200 metric tons of pulses as humanitarian food assistance. We also sent 40,000 litres of pesticide Malathion to Afghanistan through Chabahar port”, said Sonowal.

Terming the recent visit of a high-level delegation from Afghanistan to Chabahar port as ‘positive’, the Indian minister underlined the need to facilitate trade for Afghanistan and help Afghan people to stand on their own feet.

In 2022, India organised “Chabahar Day” in Mumbai with a focus on fostering closer cooperation between our countries and the wider region to enhance inter-regional trade and economic connectivity.

In January this year, External Affairs Minister S Jaishankar, during his visit to Iran met Iranian Minister of Roads and Urban Development and discussed establishing a “long-term cooperation framework” for Chabahar Port, a strategic maritime facility situated on the southereastern coast of Iran.

In a post on X, Jaishankar stated, “Began my engagements in Tehran by meeting Minister of Roads and Urban Development @mehrdadbazrpash. Detailed and productive discussion on establishing a long-term cooperation framework with respect to Chabahar port,” said Jaishankar in a post on X, then.

Their discussions also focused on the International North-South Transport Corridor (INSTC).

“Also exchanged views on the International North-South Transport Corridor,” Jaishankar’s post added.

India’s vision is to make Chabahar Port a transit hub under the International North-South Transport Corridor (INSTC) to reach out to CIS countries.

In August last year, PM Modi held talks with Iranian President Ebrahim Raisi and the two leaders reiterated their commitment to further strengthen bilateral cooperation, including to realise the full potential of Chabahar Port as a connectivity hub.

“The two leaders reiterated their commitment to further strengthen bilateral cooperation, including to realize the full potential of Chabahar Port as a connectivity hub,” the Prime Minister’s Office said in a press release.

The Chabahar port, located in Iran, is a key component of India’s connectivity initiatives, holds immense significance as it provides a viable and shorter route for trade between India, Iran, Afghanistan, and Central Asia.

Chabahar is a deep water port located in the Sistan-Baluchistan province of Iran. It is the closest Iranian port to India, and is located in the open sea, providing easy and secure access for large cargo ships.

During the visit of Prime Minister Modi to Iran in May 2016, a trilateral agreement to establish the International Transport and Transit Corridor (Chabahar Agreement) was signed by India, Iran and Afghanistan.

India is participating in the development of the first phase of the Shahid Behesti Terminal, Chabahar Port, in cooperation with Iranian government.

So far, India has supplied 06 Mobile Habour Cranes (two 140 tons and four 100 tons capacity) and other equipment worth USD 25 million.

The Indian company, India Ports Global Limited (IPGL), through its wholly owned subsidiary, India Ports Global Chabahar Free Zone (IPGCFZ), took over the operations of the Chabahar Port with effect from 24 December, 2018.

Since then, it has handled traffic of more than 90,000 TEUs of Container traffic and more than 8.4 MMT of Bulk and General Cargo. The port has also facilitated the supply of humanitarian assistance, especially during the COVID-19 pandemic.

Till date, a total of 2.5 million tons of wheat and two thousand tons of pulses have been trans-shipped from India to Afghanistan through Chabahar Port. In 2021, India supplied 40,000 litres of environmental friendly pesticide (Malathion) to Iran to fight locust menace.

Earlier, the Indian Embassy in Iran, in a post on X stated, “Hon’ble Minister @sarbanandsonwal held a fruitful meeting with his esteemed Iranian counterpart @mehrdadbazrpash. Discussed furthering the shared vision of making Chabahar Port a regional connectivity hub connecting India to Afghanistan, Central Asia, and Eurasia.”