Significance behind India developing the Chabahar port in Iran

The first phase of the Chabahar port in south-east Iran was inaugurated in December last year opening a strategic transit route between India, Iran and Afghanistan.

With Iranian President Hassan Rouhani’s visit to India, the two countries will be sealing the final operations of the strategically important port, which India is developing.

The significance of the Chabahar port:

• Despite Iran being isolated by Western countries against its disputed nuclear programme, India is one among the few countries that continued trade links with the country.
• The Chabahar port will reduce transport costs/time for Indian goods by a third and ramp up trade among India, Afghanistan and Iran with Pakistan denying transit access to New Delhi for trade with the two countries.
• The ties between India and Iran are likely to be stronger with the Chabahar port turning out to be a success story. Reports even claim that traffic is being diverted from Karachi to Chabahar. Also, India is allowing for the first time investment in rupees in Iran in an attempt to evade the banking problems caused by Western sanctions on Iran. Earlier, it was only allowed for Nepal and Bhutan.
• The project got delayed due to the western sanctions against Iran but after they were lifted in January last year, India has been pushing for the conclusion of an agreement.
• In a bid to access to markets in the northern part of the Indian Ocean and in Central Asia, Iran plans to turn the Chabahar port into a transit hub
• Located in the Sistan-Baluchistan Province on Iran's southern coast, the port will also establish India's road access to four cities in Afghanistan -Herat, Kandahar, Kabul and Mazar-e-Sharif.
• This is the first overseas venture for an Indian state-owned port.
• The first phase of the port will have India invest more than $200 million, including $150 million line of credit from Exim Bank.
• New Delhi is Tehran's second-biggest oil client after Beijing.