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RSTV: THE BIG PICTURE- JOINT USE OF CHABAHAR PORT

RSTV


Introduction:

The first Trilateral Working Group Meeting between India, Iran and Uzbekistan on joint use of Chabahar Port was held virtually. In a statement, Ministry of External Affairs said, India welcomes the interest of Uzbekistan to use the Chabahar port as a transit port. This will open up economic opportunities for the traders and business community of the region. Besides Uzbekistan, other Central Asian countries have also shown interest in using this port. India wants to cooperate closely with regional countries on this issue. The port is being developed by India, Iran and Afghanistan to boost trade ties among the three countries in the wake of Pakistan denying transit access to New Delhi. Located in the Sistan-Balochistan province on the energy-rich Iran’s southern coast, the port can be easily accessed from India’s western coast, bypassing Pakistan. It is considered to be a major transit point to connect with several Central Asian countries

Chabahar Port:

The Chabahar Agreement was signed in June 2015 and approved by Iran’s Guardian Council in November 2016. Chabahar is being seen as a gateway for trade by India, Iran and Afghanistan with Central Asian countries.

Where is Chabahar port?

Iran’s Chabahar port is located on the Gulf of Oman and is the only oceanic port of the country. The port gives access to the energy-rich Persian Gulf nations’ southern coast.

Why Chabahar port is crucial for India?

  • The first and foremost significance of the Chabahar port is the fact that India can bypass Pakistan in transporting goods to Afghanistan. Chabahar port will boost India’s access to Iran, the key gateway to the International North-South Transport Corridor that has sea, rail and road routes between India, Russia, Iran, Europe and Central Asia.
  • Chabahar port will be beneficial to India in countering Chinese presence in the Arabian Sea which China is trying to ensure by helping Pakistan develop the Gwadar port. Gwadar port is less than 400 km from Chabahar by road and 100 km by sea.
  • With Chabahar port being developed and operated by India, Iran also becomes a military ally to India. Chabahar could be used in case China decides to flex its navy muscles by stationing ships in Gwadar port to reckon its upper hand in the Indian Ocean, Persian Gulf and Middle East.
  • With Chabahar port becoming functional, there will be a significant boost in the import of iron ore, sugar and rice to India. The import cost of oil to India will also see a considerable decline. India has already increased its crude purchase from Iran since the West imposed ban on Iran was lifted.
  • Chabahar port will ensure in the establishment of a politically sustainable connectivity between India and Afghanistan. This will in turn, lead to better economic ties between the two countries.
  • From a diplomatic perspective, Chabahar port could be used as a point from where humanitarian operations could be coordinated.

Exemptions are given to Chabahar Port under US sanctions:

  • US accepting that this project is not a strategic interest to India or Iran alone but importantly it is strategically important for Afghanistan because Afghanistan is a landlocked country which depends on Pakistan for trade and Pakistan denies transit to Afghanistan for trade with India.
  • Chabahar port opens up a permanent alternative route for trade with Afghanistan and Central Asia, given the hurdles in the direct route through Pakistan.
  • The Chabahar port will also set up India’s road access to four cities in Afghanistan.
  • It facilitates India’s role in Afghanistan’s development through infrastructure and education projects.
  • It gives India’s bilateral ties with Iran, a major oil supplier and potential trade market for India, a big fillip.
  • The Chabahar port will cut transport costs/time for Indian goods by a third.
  • Chabahar port will reduce Afghanistan’s dependence on Karachi port and, hence, will translate to less Pakistani leverage over Kabul.
  • Chabahar also provides a link to the planned International North-South Transport Corridor.
  • This way it also loops in Russia and countries in Central Asia and Europe as beneficiaries.
  • According to some estimates, the Chabahar route plus INSTC could boost trade to a total of US$ 170 billion from India to Eurasia.
  • Chabahar is a rare example of a project in the region which is a win-win for all stakeholders

Geo-Economic Importance of the port:

  • Costs of imports of products like iron ore, oil, sugar, and rice to India will be significantly lowered. A study commissioned by the Ministry of Commerce has found that cost of imports via Chahbahar port along with INSTC is 30% cheaper than those via Mediterranean-Suez route.
  • Economic ties between India and Afghanistan which were in limbo due to political uncertainty will significantly improve once Chahbahar is completely operationalized. India will link Chahbahar port to Zaranj-Delaram highway in Afghanistan and is keen on developing a rail link there with the cooperation of Iran.
  • India will also be developing various industries (aluminum and urea plants) in the Chahbahar Economic Zone.

Advantages:

  • Chabahar port opens up a permanent alternative route for trade with Afghanistan and Central Asia, given the hurdles in the direct route through Pakistan.
  • The Chabahar port will also set up India’s road access to four cities in Afghanistan.
  • It facilitates India’s role in Afghanistan’s development through infrastructure and education projects.
  • It gives India’s bilateral ties with Iran, a major oil supplier and potential trade market for India, a big fillip.
  • The Chabahar port will cut transport costs/time for Indian goods by a third.
  • Chabahar port will reduce Afghanistan’s dependence on Karachi port and, hence, will translate to less Pakistani leverage over Kabul.
  • Chabahar also provides a link to the planned International North-South Transport Corridor.
  • This way it also loops in Russia and countries in Central Asia and Europe as beneficiaries.
  • According to some estimates, the Chabahar route plus INSTC could boost trade to a total of US$ 170 billion from India to Eurasia.
  • Chabahar is a rare example of a project in the region which is a win-win for all stakeholders.

Way Forward:

  • It will be important to operationalise and jointly use the port quickly and smoothen the route to Afghanistan.
  • Keeping timelines and delivery of New Delhi’s commitments will be key to the port becoming a regional hub for transit trade, steel and petrochemicals.
  • It will be necessary to encourage Afghan companies to use the route more.
  • With Chabahar, India has done well to keep a place in the intricate connectivity network of the region.
  • Given all the competing interests over Chabahar, it will require sustained and nuanced diplomacy to stay ahead in this game. 