Context:
Recently, India and Iran signed a 10-year agreement to operate a terminal at the strategically important Chabahar port in Iran.
More on the News
- The long-term agreement was signed between Indian Ports Global Ltd. (IPGL) and the Ports and Maritime Organisation (PMO) of Iran, enabling the operation of the Shahid-Behesti terminal of Chabahar port.
- This is the first time India will take over the management of an overseas port.
- As part of the agreement, the IPGL will invest approximately $120 million to equip and operate the port for the duration of the contract.
- India has also offered a credit window equivalent to $250 million for mutually identified projects aimed at improving Chabahar-related infrastructure.
- This long-term agreement was signed eight years after concluding the general framework of cooperation on the Chabahar port in 2016.
- Recently, the Ministry of External Affairs (MEA) of India had allocated Rs 100 crore for Chabahar Port for 2024-25, underlining India’s focus on connectivity projects with Iran.
About India Ports Global Ltd (IPGL)
- It was primarily formed to participate in Shahid-Behesti Port, Chabahar development project with the objective of providing an alternative and reliable access route to landlocked Afghanistan & Central Asian Countries.
- It is a wholly owned subsidiary of Sagarmala Development Company Limited.
Significance of the Agreement
- The agreement heralded a new age of trade, marine cooperation, and transshipment while boosting trilateral trade between India, Iran, and Afghanistan.
- India will use the port for humanitarian aid shipments, reaffirming its commitment to support regional development beyond commercial interests.
- With the operationalisation of the long-term investment, Chabahar could potentially become an important hub to connect India with the landlocked countries of Central Asia.
- However, to better realise its commercial and strategic potential, the development of the port must be integrated with the larger connectivity project of the International North South Transport Corridor (INSTC).
- INSTC is a multi-modal transportation established on 12 SEP 2000 in St. Petersburg, by Iran, Russia, and India (founding members) for the purpose of promoting transportation cooperation among the Member States.
About Chabahar Port
- Chabahar is a deep-water port located in the Sistan-Baluchistan province on the energy-rich southern coast of Iran.
- It is the closest Iranian port to India and is located in the open sea, thus providing easy and secure access for large cargo ships.
- In May 2016, a trilateral agreement to establish the International Transport and Transit Corridor (Chabahar Agreement) was signed by India, Iran, and Afghanistan.
- India is participating in the development of the first phase of the Shahid Behesti terminal of the Chabahar port and has so far supplied six mobile harbour cranes — two with a lifting capacity of 140 tonnes each and four with a capacity of 100 tonnes each — and other equipment worth $25 million.