India concludes Agreement with Iran on Chabahar Port

India’s Foreign Minister, S Jaishankar highlighted the broader regional benefits of its recently inked ten year port agreement with Iran ignoring  words of caution from the United States which may result in invocation of sanctions against India. The Indian Foreign Minister in defence of the agreement called for restraint from the US side and to avoid myopically construing the agreement.  The agreement was signed paving the way forward for development of Iran’s strategically significant Chabahar Port in the close proximity of Pakistan. India potentially risks incurring the wrath of US and having sanctions imposed if it engages in conducting trade or business with Iran and Iranian entities.

Terms of Agreement

As per the terms of the agreement India intends to invest approximately $370 million for the purpose of extensive development of Port of Chabahr infrastructure.

Lingering Trade of India and Iran

Indian maritime involvement with the Iranian Port of Chabahar commenced in the year 2016 .Subsequently Iran took over operations of the port at the end of 2018. The Port of Chabahar is significant as it provides a crucial logistic and transit route for Indian origin goods to Afghanistan and Central Asia conveniently bypassing the land route through Pakistan. It is relevant to share that in the recent past, as an indication of the potential of Indian and Iranian trade potential,  around 2.5 million tonnes of wheat and 2,000 tonnes of pulses have been shipped from India to Afghanistan through Chabahar port. The commercial aspect of trade from India to Afghanistan through the Port of Chabahar will be evident only when the volume of trade increases as economies of scale define commercial equations.India remains undeterred by US threats of sanctions as it views the Chabahar port project as vital to its strategic goals of expansion of regional connectivity, commercial and diplomatic outreach in the form of  trade.

Access by Central Asia and China to Sea Ports of Pakistan

Pakistan’s bureaucracy continues to dither over transit trade agreements and implementation thereof whereby it is ideally located to provide access to sea to the Central Asian countries which are keen to use the ports of Pakistan. The ports of Gwadar, Karachi Port and Port Qasim are the three ports of Pakistan and have sufficient area for exclusive economic zones and commercial warehouses. The Central Asian states major exports are to the Far East and logistically the cost of shipping is lower for Central Asian origin containers and bulk cargoes including minerals and fertilisers at the ports of Pakistan. Time and tide waits for no one and the bureaucracy of Pakistan continues to drag its feet .

 

By Nadir Mumtaz

Source/Credit

https://www.focuseatv.com/india-urges-us-to-broaden-view-on-chabahar-port-agreement-with-iran