Chabahar: India’s Gateway to Central Asia

Chabahar: India's Gateway to Central Asia



The recent decision by the Indian government to invest further in the
Iranian port city of Chabahar demonstrates the importance of this port for
India. The port, located in the Sistan-Baluchistan Province on Iran's
southeastern coast, is of immense strategic value as it lies outside the
Persian Gulf and can be easily accessed from India's west coast.

The development of Chabahar has been discussed often during India-Iran
bilateral talks since 2003, but has gained higher priority in recent times.
On August 2012, India, Iran and Afghanistan held a trilateral meeting to
discuss the Chabahar port development project and agreed to speed up the
process. The initiative is expected to serve a number of purposes,
including expansion of trade, investments and transit facilitation for the
Central Asian Republics (CARs). The intergovernmental memorandum of
understanding (MoU) proposed to be signed between India and Iran are likely
to comprise the following main elements:

An Indian Joint Venture (JV) company will lease two fully constructed
berths in Chabahar port's Phase-I project for a period of ten years,
which could be renewed by mutual agreement.




The JV Company will invest US $ 85.21 million for equipping the two
berths within 12 months as a container terminal, and the second as a
multi-purpose cargo terminal.




The Indian and Iranian sides could enter into subsequent negotiations
for participation in the construction, equipping and operating of
terminals in Phase-II on build-operate-transfer (BOT) basis, subject
to the Indian side's satisfactory performance in Phase-I.




The Indian government also approved the proposal to constitute a JV or
other appropriate Special Purpose Vehicle (SPV) comprising the Jawaharlal
Nehru Port Trust (JNPT) and the Kandla Port Trust (KPT), and if required, a
local Iranian partner and/or an Indian private sector partner to serve as
the means for India's participation in the development of the port. The
Indian government also approved incurring an annual revenue expenditure of
US$ 22.95 million to support the operational activities of the Indian JV.

India's presence in Chabahar port would give it a sea-land access into
Afghanistan as well as to Central Asia through Iran's eastern borders. From
the Chabahar port, using the existing Iranian road network to the border
town of Zaranj in Afghanistan, which is at a distance of 883 kilometres
from the port. Furthermore, the Zaranj-Delaram road constructed by India in
2009 (the garland highway) can also be used to access four of the major
cities of Afghanistan; Herat, Kandahar, Kabul and Mazar-e-Sharif.

This infrastructure will cater to the needs of Indian state-owned and
private companies to extract iron-ore from the Hajigak mines in Bamiyan
province, that a route for exporting this natural resource from Afghanistan
through Iran back into India. These resources, of course, also represent
huge potential income for Afghanistan. Finally, this infrastructure
provides India with a route for Indian exports (and continued aid) to
Afghanistan. This sea-land route to and from Afghanistan through Iran is of
significance to India, given the continued intransigence of the Pakistani
government in not allowing India access to the faster and cheaper land
route across their country, even for transporting humanitarian goods. The
port facility at Chabahar can also provide India an altenative to its long-
standing energy pipeline projects like Turkmenistan-Afghanistan-Pakistan-
India (TAPI) or the Iran-Pakistan-India (IPI), which have been stalled due
to geopolitcal reasons.

India's 'Connect Central Asia' policy, which is a broad-based approach,
includes political, security, economic and cultural connections,
concentrates on strengthening India's strategic and security cooperation in
the region. India is also working to connect Iran and Afghanistan with
Tajikistan and other CARs via these roads, thereby increasing regional
trade as well as creating a route for India to access the rich gas and oil
reserves of Central Asia.

Another factor that needs to be highlighted here is that today, Central
Asian has become an area of immense importance to Europe, US, China, and
Iran. The US is trying to undermine Russian and Iranian gains, and China
has committed billions of dollars for the development of Central Asian oil
fields to fulfil its future energy needs.

The question that concerns India is that any external influence in CARs
will have serious implications, direct or indirect, for the countries of
the region. Related to the geostrategic significance of CARs is the problem
of religious extremism/terrorism or what CARs call 'political Islam' and
problem of drugs and arms trafficking. India, as an extended neighbour of
CARs, has major geostrategic and economic interests in this region. The
future prospects for cooperation between Central Asia and India in the
field of energy security assume great importance. Peace and stability in
CARs and Afghanistan seem to be the most crucial factor for India's
security.

For India, Chabahar port project is expected to serve a number of purposes,
including expansion of trade, investments and transit facilitation for the
CARs. The port will serve as the Indian Ocean outlet for Central Asia, and
provide connectivity to the proposed International North South Corridor
(INSTC) running northward through Iran and Afghanistan, which will also
provide India vital access to Central Asian Republics, Russia, and
ultimately European markets, enabling India to effectively compete with
China.

Although there are no signs of any significant Indian-Iranian naval
cooperation, commercial maritime cooperation and joint transportation
infrastructure development has elevated the level of India-Iran strategic
cooperation.

While India will secure access to markets in Central Asia for its future
economic growth, Iran would be able to facilitate further connectivity to
CARs for its resources. As India is constructing infrastructure in
Afghanistan, this port can to develop as a hub for trading of commodities
in the region.