India-Iran and Chabahar port

India-Iran and Chabahar port

News: Recently, India and Iran have narrowed the gap on the major issue of arbitration in the 10-year agreement for operations at the strategic Chabahar port.

About Chabahar port:
• Chabahar Port is a seaport located in southeastern Iran, on the Gulf of Oman. It serves as Iran’s only oceanic port and consists of two separate ports named Shahid Kalantari and Shahid Beheshti, each of which has five berths. It is only about 170 kilometers west of the Pakistani port of Gwadar.

What is the strategic importance of Chabahar port for India?
• Bypass Pakistan: The port allows India to trade with Afghanistan without going through Pakistan, leading to better commercial links between the two nations.
• Access to Central Asia and Europe: The location of the Chabahar port is crucial for India in linking trade routes from the Indian Ocean to Afghanistan, Central Asia, and also to Europe, thereby avoiding a land route through Pakistan.
• Counter China’s Influence: The port could help counter China’s growing influence in the Indian Ocean. China is currently developing the Gwadar Port in Pakistan.
• Economic Cooperation: This project signals economic cooperation between India and Iran. The port will allow India to reach out to global markets.
• Access to Natural Gas Reserves: It gives India the opportunity to tap into the vast natural gas riches of Central Asia.
• Strategic Goals Alignment: Chabahar port is in line with India’s strategic goals. It is an important pillar of Indian foreign policy aimed at finding shorter routes for its exports and imports, countering China’s influence in the Indian Ocean region, and circumventing Pakistan’s Gwadar port.
• Strengthening Indo-Iranian Ties: The port could strengthen Indo-Iranian ties, which could balance out growing Sino-Pakistani cooperation.

India-Iran relations – Present scenario:
• Long term agreement over Chabahar port is yet to be made ever since initial agreement between the country in 2016.
• Depletion of rupee reserves held by the Iranian side in the vostro account has impacted Iran’s ability to import basmati rice and tea. (Iran has been either the largest or second-largest importer of Indian basmati since 2014-15, according to government data.)
• Rupee-rial trade can be a way to revive India-Iran commerce.