India inks 10-year pact with Iran on Chabahar port

India on Monday sealed a bilateral pact with Iran to operate Chabahar port for the next ten years. The pact, signed in the presence of union minister of ports and shipping Sarbananda Sonowal and Iran's minister of roads and urban development Mehrdad Bazrpash, is a significant leg up for India as it grants access to Afghanistan and other Central Asian countries, while also serving as an alternative to China's Belt and Road initiative.

The long-term bilateral contract on Chabahar port operation was signed between Indian Ports Global Limited (IPGL) and the Port & Maritime Organisation (PMO) of Iran. This agreement aims to enhance regional connectivity and facilitate trade, particularly between India, Iran and Afghanistan. It may be noted that the India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, facilitated the first consignment of exports from Afghanistan to India in 2019. The operations continued through short-terms contracts while negotiations on the long-term agreement continued alongside.

"Today is a historic day for the maritime sector of the region as India and Iran signed this Long Term Agreement on Chabahar Port heralding a new age of trade, marine cooperation as well as transshipment while boosting trilateral trade among India, Iran and Afghanistan. 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," Sonowal said during the signing of the pact.

"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. This linkage has unlocked new avenues for trade and fortified supply chain resilience across the region. Under the leadership of Prime Minister Shri Narendra Modi ji, India is on its way to become a major maritime player with a formidable supply chain network. The establishment of regular ship calls between Chabahar Port and Indian ports has instilled stability and confidence among traders, offering them visibility and predictability in their supply chain operations," Sonowal added.

Located in the Sistan-Baluchistan province on Iran’s southwestern coast, the port is an important point on the Arabian Sea with easy access from India’s West coast. Kandla port in Gujarat is the closest to the Chabahar port at 550 nautical miles while the distance between Chabahar and Mumbai is 786 Nautical Miles.

Since 2019, it has handled container traffic of more than 80,000 TEUs and Bulk and general cargo of more than 8 million tons. Its strategic significance could be understood by the fact that it offers an alternative transit from Strait of Hormuz for cargo traffic between Central Asian countries and Afghanistan. This diversification strengthens India's strategic position in the region.