Indian Budget Allocates Close to $14 Million to Chabahar Port Project

EghtesadOnline: In India, Rs17,300 crore ($2.41 billion) have been allocated for the Ministry of External Affairs in the budget, with Rs100 crore ($13.98 million) earmarked for the strategic Chabahar Port project in southeastern Iran, which gives India connectivity to Afghanistan bypassing Pakistan.

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03 February 2020

The total aid to countries has decreased by Rs56 crore ($7.83 million) from Rs6,963 ($973.85 million) in the revised estimates of 2019-20 to Rs6,907 crore ($966 million) in the 2020-21 budget, Indian digital newspaper ThePrint reported.

The aid for the strategically-important Chabahar Port, which was zero in the revised estimates of 2019-20, has gone up to Rs100 crore for the next fiscal year, according to Financial Tribune.

The port complex, backed by India, on Iran’s coast along the Sea of Oman is being developed to provide an alternative trade route between India and Afghanistan.

In May 2016, India and Iran signed a bilateral agreement under which India would refurbish one of the berths at Shahid Beheshti Terminal and reconstruct a 600-meter-long container handling facility there.

However, only a portion of the two berths has been completed because of deteriorating relations between the US and Iran after the election of US President Donald Trump in November 2016, which culminated with the reimpositon of economic sanctions in 2018.

In December last year, India took over operations of part of Shahid Beheshti Port.

The first phase of Shahid Beheshti Port development project was inaugurated in December 2017 by Iranian President Hassan Rouhani, opening a new strategic route connecting Iran, India and Afghanistan.

Chabahar is Iran’s only oceanic port town and consists of two separate terminals: Shahid Kalantari and Shahid Beheshti. The opening of first phase, namely Shahid Beheshti terminal (out of five phases defined for the project), which has tripled its capacity to 8.5 million tons (equal to that of all the northern ports of the country), allows the docking of super-large container ships (between 100,000 DWT and 120,000 DWT) and increase India’s connectivity with Afghanistan.

India Urged to Expedite Development Work

Iran and India need to work together to expedite rail connectivity to Afghanistan and procure equipment for the development of Chabahar Port, Iran's Foreign Minister Mohammad Javad Zarif said in Mumbai last month.

Despite the US exemption of India from sanctions imposed on Iran for the development of the port in November 2018, the European and Chinese suppliers, who had bagged contracts to supply equipment for the port, have been reluctant to deliver, fearing an adverse impact on their business with the US, Press Trust of India reported.

"Chabahar Port is essential for Afghanistan and Central Asia. There are several problems and we made several advances on them. One of them is that our parliament has recently approved the expansion of the free zone," Zarif said.

The Iranian minister noted that the problem in the project’s progress is that India has found difficulty in procuring equipment for the port despite the exemption.

"The other issue is connecting Chabahar to Afghanistan and to Central Asia through rail. We need to complete the Chabahar-Zahedan rail network. We have the infrastructure for that, but we need rails. We are in negotiation with India for providing rails. We produce our own rails but not at the scale we need. So, Iran and India need to work together on procurement of equipment for the port as well as finishing the rail link," he said.

"The most important priority for Iran is to have good relations with neighbors, stability in neighborhood and attract more investments in the country. We want to take a leading role in peace building."

According to Behrouz Aqaei, director general of Ports and Maritime Organization of Sistan-Baluchestan Province, the current Iranian year (ending March 19, 2020) saw a 100% rise in exports from Afghanistan via Iran’s Chabahar to other countries, the Ministry of Roads and Urban Development reported on its website.