Away from the centrestage of electoral politics, India managed to cut a big strategic maritime deal. On May 13, it was agreed (between Iran and India) that India would develop and operate the Shahid Behesti terminal at Iran’s Chabahar port (which has two terminals) for 10 years. A similar 10-year pact was arrived at in 2016, but could not be put into effect because the US under Donald Trump slapped sanctions on Iran in November 2018. As a result, India could only develop the port terminal in fits and starts through short-term contracts. Now, a long-term arrangement can raise India’s strategic heft and help diversify its trade basket.

India Ports Global Ltd will invest $125 million for basic port equipment, while another $250 million is expected through credit for infrastructure development. Considering the major gains in the offing, India must step up its investment. The first set of gains relates to the port and its neighbourhood to the east (Pakistan) and the south (Indian Ocean). These are perhaps more strategic than economic. The second pertains to the development of the 7,200 km long International North South Transport Corridor (INSTC) from Chabahar through Iran, Azerbaijan, Central Asia, Russia and into Europe. In trading with most of Europe, the INSTC is expected to work out quicker and cheaper than the Suez Canal route. It also avoids the huge strategic risks associated with moving goods through Suez or the Gulf of Aden. India’s trade with the Central Asian Republics can offset protectionism in Western world. Gas-rich Central Asia provides India with an energy option.

Chabahar is situated in south-eastern Iran, closer to the mouth of the Gulf of Oman and to the east of the Straits of Hormuz near which Iran’s major port Bandar Abbas is located. It is Iran’s only deep sea port, unlike Bandar Abbas, which means large liners can dock there. Iran’s cargo costs are high as some of its goods have to be transhipped from deep sea ports in the UAE. Chabahar will reduce Iran’s costs, and by implication India’s as well. India gets access to Iran, Afghanistan and central Asia by skirting Pakistan. To the south, it improves India’s strategic influence in the Indian Ocean region. Iran’s ties with India would help it counterbalance its economic partnership with China. India’s presence in Chabahar becomes important to negate the influence of the Gwadar port to the east in Pakistan, which is controlled by the Chinese.

Strategically, India has conveyed that it is a global player in its own right, keeping ties with Iran going despite US reservations. The only cloud over Chabahar is the threat of US sanctions over Iran. Here, the US has been blowing hot and cold, realising the need to negate China’s influence over Iran and India’s role in that respect. Yet, with Iran and Israel being daggers drawn, there is always a sense of uncertainty — which could go up if the Republicans return to power. That said, Chabahar remains a good strategic and business proposition for India.

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