India is looking to clear the path for signing a long-term contract relating to Chabahar port (in Iran), while plans are afoot to increase investments at the Shahid Beheshti terminal there.

Sources aware of the discussions say the plan is to go ahead with a 10-year contract, renewable automatically, while the foreign arbitration clause (settlement of disputes in international courts) - which was holding up the contract signing – is likely to be dropped.

Arbitration could be conducted under rules framed by the UN Commission on International Trade Law (UNCITRAL), which is favoured by India, over other international trade arbitration mechanisms, according to reports in international media.

In all likelihood, Indian officials could visit Chabahar over the next few weeks to work out details of the long-term contract. Iran’s accession to BRICS is also seen as a push towards speeding up the ongoing negotiations.

Other issues such as guarantee of minimum traffic will also be discussed.

Chabahar is India’s first overseas port project and the long-term agreement will replace an initial pact, which covers India’s operations at Shahid Beheshti terminal in Chabahar port. The initial pact is currently renewed every year.

The process of deliberations are on. And efforts are on to resolve issues and complete deliberations as early as possible,” an Indian official aware of the discussions told businessline.

“Officials from the Ministry or the state-run IPGL (India Ports Global Ltd), which runs operations at the terminal, could visit the port,” the official added.

Iranian news media recently said India was ready to finalise documents pertaining to the completion of the project. And the Chief Executive of Iran’s Ports and Maritime Organization (PMO) said “only one paragraph of the agreement has remained unsettled that should be addressed in less than a month”.

Commercially Viable Operations

The Chabahar contract, pegged at $85 million, envisages development under the Build-Operate-Transfer (BOT) mode, Indian officials aware of the developments said. A $150-million line of credit was also announced in 2016. As of 2023, India has supplied six gantry cranes to the tune of $25 million for the port.

This year, India aims to handle 13,282 TEUs (twenty foot equivalent units) at the Shahid Beheshti terminal, as against 3,096 TEUs in 2022.

Since IPGL began operations at the terminal in 2018 (till May 2023), it has handled more than 6.56 million tonnes of bulk cargo, including trans-shipment from Australia, Bangladesh, Brazil, Germany, Russia, and the UAE, sources say.

Shipping Minister, Sarbananda Sonowal, recently told businessline that operations at Chabahar are “already commercially viable”.