Iran and India signed a landmark agreement on May 13 to collaborate on the Chabahar Port for the next 10 years.
The contract, signed by India Ports Global Ltd (IPGL) and Iran’s Ports & Maritime Organisation (PMO), signified a major step in strengthening regional trade and connectivity. Under the agreement, India’s IPGL would equip and operate the Shahid Beheshti Port in Chabahar.
The deal, valued at around $120 million, highlighted India’s commitment to enhancing Chabahar’s infrastructure and operational capabilities. IPGL will extend a credit line of about $250 million for joint projects aimed at further improving Chabahar’s facilities, bringing the contract’s value to $370 million, Iranian officials said.
India has been actively involved in the development of the port in Chabahar, located on Iran’s southeastern coast along the Gulf of Oman, to transport goods to Iran, Afghanistan, and Central Asian countries, bypassing Karachi and Gwadar ports in Pakistan. However, U.S. sanctions on Iran have hindered the port’s progress.
Agreement signing in Iran
The deal signing, attended by Indian and Iranian ministers, emphasized the strategic importance of Chabahar in promoting closer economic ties between the two nations and facilitating trade with Afghanistan and Central Asian countries.
Minister Sarbananda Sonowal, leading the Indian delegation, emphasized the historical significance of the agreement, signaling a new era of maritime cooperation and transshipment.
Sonowal had “fruitful bilateral meeting” with his Iranian counterpart Mehrdad Bazrpash. “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,” according to the official statement issued by India.
“Chabahar Port’s significance transcends its role as a mere conduit between India and Iran; it serves as a vital trade artery connecting India with Afghanistan and Central Asian Countries,” India’s Shipping Minister Sarbananda Sonowal said in Tehran. “This linkage has unlocked new avenues for trade and fortified supply chain resilience across the region.”
“As India continues to invest in Chabahar Port, its efficiency and capacity will be further enhanced, solidifying India’s commitment to the region’s economic development,” he said.
In his address, Minister Sonowal highlighted Indian Prime Minister Narendra Modi’s vision, positioning Chabahar as a key component of India’s regional trade strategy and a vital link in the global supply chain.
India will utilize the port for trade in the region while enhancing its role in the global supply chain. “India will use the port for humanitarian aid shipments reaffirming its commitment to support regional development beyond commercial interests, showcasing its commitment to fostering goodwill and stability in the region,” the Minister stated.
Under the terms of the agreement, India will acquire a range of equipment including MHCs, RMQCs, RTGCs, Reach Stackers, Forklifts, Pneumatic Unloaders, and more for Chabahar Port. This procurement is poised to unlock greater trade and investment prospects, potentially propelling India’s economic growth.
Future plans for Chabahar
Situated in Iran‘s Sistan-Baluchistan province, Chabahar offers strategic proximity to India’s west coast, with Kandla port in Gujarat being the closest maritime connection. Since its inception, Chabahar played a pivotal role in handling container traffic and bulk cargo, further solidifying its significance as a key maritime gateway.
India’s assumption of management responsibilities marked a historic milestone, positioning Chabahar as a linchpin in India’s connectivity ambitions, particularly with Afghanistan, Central Asia, and beyond.
Looking ahead, plans are underway to integrate Chabahar with the International North South Transport Corridor (INSTC), enhancing India’s connectivity with Russia via Iran. This strategic alignment reflected India’s broader vision of leveraging Chabahar’s potential to deepen regional economic integration and counterbalance competing maritime initiatives.
Iran and India to launch joint shipping company
Iran’s Minister of Roads and Urban Development, Mehrdad Bazrpash, disclosed plans for the imminent launch of an Iran-India joint shipping company.
Speaking at the signing ceremony for a contract to equip and operate a container terminal and cargo barges at Chabahar Port with an Indian company, Bazrpash emphasized Iran’s commitment to enhancing rail, road, and sea infrastructure. The minister underscored the growing transit activities across various sectors in Iran, highlighting the surge in goods transportation between Iran, India, and China via a direct container shipping line established earlier this year.
Bazrpash emphasized the strategic significance of Chabahar Port in Iran’s transit development plan, particularly within the eastern branch of the north-south corridor. He noted that upon the completion of the Chabahar-Zahedan railway section by year-end, the port’s role would be further amplified.
Moreover, Bazrpash mentioned that the contract value between Iran and India for projects at Chabahar Port has risen to $370 million, signifying the deepening collaboration between the two nations in enhancing maritime infrastructure and fostering regional connectivity.