'India doubling down on Chabahar port project as strategic counter to China BRI gains momentum'

April 6, 2021 - 14:49

By the end of May, India will begin full-scale operations in its first foreign port venture at Iran’s Chabahar, a facility that opens on the Gulf of Oman that will aim to facilitate more South Asia, Central Asia and West Asia trade, Asia Times wrote on Sunday, April 4.

India’s $500 million investment represents a clear and potent commercial challenge to China’s massive port investment in neighboring Pakistan’s Gwadar, a key component of Beijing’s Belt and Road Initiative (BRI).

India has nearly completed development of two terminals at Chahabar’s Shahid Beheshti complex that opens onto the Gulf of Oman.

The 10-year lease agreement, a deal first clinched by Prime Minister Narendra Modi in Tehran in 2016, has until now been hobbled by U.S. sanctions imposed under the Donald Trump administration.  

Indian suppliers and engineers, some with interests in the U.S., were reluctant to deliver essential machinery and services to Iran on fears they could somehow be sanctioned, despite clear exemptions on Chabahar in Trump’s sanction order. That led to certain speculation that China may take over the project from India.

But New Delhi has doubled down and accelerated the project with the shift from Trump to Joe Biden, banking like others on a new breakthrough on the Joint Comprehensive Plan of Action (JCPOA), the official name for the 2015 nuclear agreement, and a broader U.S.-Iran warming trend.

“I will inaugurate the fully operationalized Chabahar port in April or May,” Mansukh Mandaviya, India’s ports, and shipping minister, said in a recent virtual discussion on Iran’s Chabahar port.

India has supplied two large cargo-moving cranes and will deliver two more in the coming weeks before the facility’s expected ceremonial opening next month.

New Delhi is already promoting the port’s potential humanitarian role, noting it was used to send emergency shipments of wheat to Afghanistan during the Covid-19 crisis and pesticide to Iran to deal with a recent locust infestation.

Chabahar has seen limited operations since 2019, a result of U.S. restrictions imposed on Iran’s energy exports. The port handled a mere 123 vessels with 1.8 million tons of bulk and general cargo from February 2019 to January 2021, well below its operating capacity, according to reports.

That’s set to change. New Delhi ultimately aims to link Chabahar to its International North-South Transport Corridor (INSTC), a project initially proposed by India, Russia, and Iran in 2000 and later joined by 10 other Central Asian nations.

Some see the INSTC as a less-monied rival to China’s BRI, which has invested heavily in Pakistan’s road, power and trade infrastructure, including huge multi-billion-dollar investments at Gwadar port.

INSTC envisions a 7,200 kilometer-long, multimode network comprised of shipping, rail, and road links connecting India’s Mumbai with Europe via Moscow and Central Asia. Initial estimates suggest INSTC could cut current carriage costs by about 30% and travel times by half.

Iran has already started working on a 600-kilometer-long railway line connecting Chabahar port to Zahedan, the provincial capital of Sistan-Baluchestan province close to the Afghan border.

Chabahar oceanic port consists of Shahid Kalantari and Shahid Beheshti terminals, each of which has five berth facilities. The port is located in Iran’s Sistan-Balouchestan Province and is about 120 kilometers southwest of Pakistan’s Baluchistan province, where the China-funded Gwadar port is situated.

In May 2016, India, Iran, and Afghanistan signed a trilateral agreement for the strategically-located Chabahar to give New Delhi access to Kabul and Central Asia.

The original plan committed at least $21 billion to the so-called Chabahar–Hajigak corridor, which then included $85 million for Chabahar port development, a $150 million credit line to Iran, an $8 billion India-Iran MOU for Indian industrial investment in a Chabahar special economic zone, and $11 billion for the Hajigak iron and steel mining project awarded to seven Indian companies in central Afghanistan.

Hajigak is the best known and largest iron oxide deposit in Afghanistan. It is located near the Hajigak Pass, with its area divided between Maidan Wardak and Bamyan provinces.

Unlike Chabahar, which is designed more to serve the economic and trade interests of the wider region, Gwadar is more tilted toward Beijing’s ambitions, analysts and traders say.

Riaz Haq, founder and president of PakAlumni Worldwide, a global social network for Pakistanis, wrote in a recent blog that “China is looking to build and use Gwadar in Pakistan as Hong Kong West to serve as a superhighway for China’s trade expansion in [the] Middle East (West Asia), Africa and Europe.”

Gwadar port’s planned capacity will accommodate a massive 300 to 400 million tons of cargo annually, comparable to the combined annual capacity of all Indian ports. It also dwarfs the 10-12 million tons of cargo handling capacity now planned for Chabahar.

In another comparison, the largest U.S. port at Long Beach, California, handles 80 million tons of cargo, about a quarter of what Gwadar could handle upon completion of a project that is designed largely to receive and move China’s trade.

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