New Delhi: Following the signing of the long-term main contract for the development of Shahid Beheshti Port Terminal in Chabahar, Iran, Union Minister of Ports, Shipping and Waterways Sarbananda Sonowal has said that this will reduce transport time and costs between India and Europe using a multimodal approach.
India is playing a major role in the development of the Chabahar port in Iran which is a key to the International North-South Transport Corridor (INSTC).
“The INSTC aims to reduce transport time and costs between India and Europe using a multimodal approach (ship, rail, and road), primarily connecting India, Iran, Azerbaijan, Russia and other Eurasian countries,” Sonowal explained to ETV Bharat from Tehran.
Amid the hectic 2024 Lok Sabha hustings, Sonowal visited Tehran on Monday to witness the signing ceremony of the long-term main contract for the development of the Shahid Beheshti Port Terminal in Chabahar, Iran.
“The contract was signed between India Port Global Limited (IPGL) and Ports and Maritime Organisation (PMO) of Iran,” a statement issued by the Ministry of Ports, Shipping and Waterways read.
“The Union Minister held a fruitful bilateral meeting with his counterpart Mehrdad Bazrpash, Minister of Roads and Urban Development of Iran. The Ministers recalled the common vision of their leaders to further strengthen bilateral cooperation in connectivity initiatives and in making Chabahar Port a regional connectivity hub.”
What is the INSTC?
The INSTC is a 7,200-km-long multi-mode network of ship, rail and road routes for moving freight. India, Iran and Russia had in September 2000 signed the INSTC agreement to build a corridor to provide the shortest multi-model transportation route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and St Petersburg. From St Petersburg, North Europe is within easy reach via Russia.
The estimated capacity of the corridor is 20-30 million tonnes of goods per year. The route primarily involves moving freight from India, Iran, Azerbaijan, and Russia via ship, rail, and road. The objective of the corridor is to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan and Bandar Anzali.
Why is the Chabahar port important for INSTC?
Simply put, it will help India benefit from Iran’s unique geographical position to access markets in Central Asia, Afghanistan and Eurasia.
In January this year, during his visit to Iran, External Affairs Minister S Jaishankar said that the Chabahar port is a “joint project with a joint vision of connectivity”.
Chabahar port provides India with a strategic foothold in the region, offering access to Afghanistan and Central Asia while bypassing Pakistan. The port also serves as a counterbalance to the Chinese-funded Gwadar port in Pakistan, which is part of the China-Pakistan Economic Corridor (CPEC).
India views Chabahar as a crucial component of its broader connectivity initiatives, such as the INSTC and the Ashgabat Agreement. These projects aim to facilitate trade and transit between India, Iran, Afghanistan, Central Asia and beyond.
The development of Chabahar port offers significant trade and economic benefits for India. It provides an alternative route for Indian goods to reach Afghanistan and Central Asia, reducing dependency on the more costly and politically sensitive route through Pakistan. Additionally, Chabahar facilitates access to Iran’s vast market and serves as a gateway for Indian businesses to expand their presence in the region.
India has been actively involved in the development of infrastructure at Chabahar port. In 2016, India, Iran and Afghanistan signed a trilateral agreement to develop the port and establish a transit and transport corridor. India pledged $500 million for the development of port infrastructure, including the construction of berths and terminals.
Despite facing challenges such as delays due to sanctions on Iran and logistical hurdles, India has made progress in operationalising Chabahar port. In 2018, India took over operations of the port’s first phase, and commercial shipments have since commenced. India has also expressed interest in expanding the port and developing associated infrastructure, such as road and rail links, to enhance connectivity and facilitate trade.
The Chabahar port and the INSTC have become a priority for India because of the Israel-Hamas war raging on in Gaza. During the G20 Summit held in New Delhi in 2023, an India-Middle East-Europe Economic Corridor (IMEC), was proposed that aims to bolster economic development by fostering connectivity and economic integration between Asia, the Persian Gulf and Europe. The IMEC comprises an Eastern Corridor connecting India to the Gulf region and a Northern Corridor connecting the Gulf region to Europe. It will include a railway and ship-rail transit network and road transport routes. On September 10, the Memorandum of Understanding (MoU) was unveiled during the 2023 G20 New Delhi Summit by the governments of India, the US, the United Arab Emirates (UAE), Saudi Arabia, France, Germany, Italy and the European Union (EU).
“IMEC aims to boost economic cooperation among participating countries and counter China’s Belt and Road Initiative,” Sonowal said. “The INSTC seeks to enhance regional connectivity and trade, offering an alternative to traditional routes.”
He then pointed out that the IMEC faces challenges due to geopolitical tensions in the Middle East, high infrastructure costs, competition from existing routes, and security concerns in the Gulf of Aden.
At the same time, he said that the INSTC faces hurdles from sanctions on Iran and Russia, infrastructure limitations in some countries and competition from existing routes. But, the fact of the matter is India’s interest is in developing the Chabahar port, which is a part of the already developing INSTC.
So, how can Chabahar port complement India’s interests in INSTC and IMEC?
“Both IMEC and INSTC represent India’s efforts to diversify trade routes, reduce dependence on the choke points and enhance economic ties with key partners in the Middle East, Europe, and Eurasia,” Sonowal said. “Their success depends on overcoming geopolitical challenges, securing investments and ensuring efficient implementation.”
Read more: India And Iran Ink Pact For Operation Of Terminal At Chabahar Port
