India, Iran ink 10-yr Chabahar Port pact; to counter Pak, China

India signs an agreement with Iran on Monday to manage Chabahar Port for the next 10 years. This is the first time that India will run a foreign port and, as part of the pact, will also finance development of the port located in southeastern Iran. Access to Chabahar port could bolster India’s trade links with Central Asia and Eurasia, offsetting the Belt and Road Initiative of China and Pakistan’s Gwadar Port.

Managing Chabahar Port would also let India bypass Pakistan while creating a direct trade corridor with Afghanistan. Long-haul plans include connecting Chabahar Port with the International North South Transport Corridor, or INSTC, which is a key trade link between India and Russia.

The agreement between the two nations is scheduled to be automatically extended at the end of 10 years.

Minister of Ports, Shipping and Waterways Sarbananda Sonowal is scheduled to ink the deal in Iran on Monday, according to media report. The Chabahar deal has significantly featured in Indo-Iran talks over the past few years. The two nations signed a pact underlining the conditions of the deal when Prime Minister Narendra Modi visited Iran in 2016. Subsequently the issue featured prominently during talks between the two nations when erstwhile Iranian President Hassan Rouhani was in India in 2018. Chabahar was a subject of discussion between Prime Minister Modi and Iran’s head of state during the BRICS summit in South Africa last August, and once again in November 2023 when the two leaders had a telephonic conversation to discuss the Gaza impasse. The topic also came up for discussion during Minister of External Affairs S. Jaishankar’s visit to Iran in January this year.

The pact replaces an old agreement of 2016 between the two nations that covered just the management of Shahid Beheshti Terminal of the Chabahar Port and had to be renewed annually. The 2016 agreement comprised a three-nation pact that India signed with Iran and Afghanistan to develop the terminal.

The timing of a long-term Indo-Iran deal over Chabahar port is important given the fact that geopolitical crisis in West Asia has had an adverse effect on vital trade routes over the past months.

Beyond Chabahar, the Ministry of External Affairs (MEA) last month sanctioned a proposal that India Ports Global, a subsidiary under the Ministry of Ports, Shipping and Waterways, had mooted to manage the Sittwe Port of Myanmar, which is located in the Bay of Bengal.