1st Batch of Indian Port Equipment Worth $8.5m Arrives in Chabahar

EghtesadOnline: The first batch of India’s strategic equipment for loading and unloading cargos worth $8.5 million has arrived at Chabahar’s Shahid Beheshti Port, says Behrouz Aqaei, the head of Sistan-Baluchestan’s Ports and Maritime Organization.

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19 January 2021

“The import of the equipment is part of the $85-million build, operate, transfer contract between Ports and Maritime Organization of Iran and an Indian investor company,” he was quoted as saying by IRNA, adding that the equipment will be used for the development of Phase I of Shahid Beheshti Port.

Two 140-ton mobile harbor cranes arrived at Chabahar Pport on Saturday and are being currently unloaded, DNA India reported on Sunday.

“Fast pacing the work on the crucial Chabahar Port, the Government of India has supplied the much-awaited first shipment of mobile harbor cranes to Iran. Two 140-ton mobile harbor cranes arrived at Chabahar Port on Saturday night and are being currently unloaded,” the report said, adding that India has supplied the cranes via an Italian company called Italgru.

This is the first time an Indian BOT contract is implemented in an Iranian port with 100% foreign investment, India Today reported, adding that India is the only foreign country currently involved in a major development project in Iran despite the US sanctions.

Chabahar is a key connectivity project of India towards its west and provides connectivity via Iran to Afghanistan and beyond. India developed the Shahid Beheshti Port at Chabahar as part of the India-Iran-Afghanistan 2016 agreement.

In December 2018, an Indian company India Ports Global Limited took over the port’s operations and as of August 2020, the port has handled 1.2 million tons of cargo and 82,000 containers. In fact, India used the port to send 75,000 tons of wheat to Afghanistan as part of the humanitarian aid amid the Covid-19 pandemic.

Chabahar could prove to be a gateway to Central Asia and Eurasia. A year ago, the Trump administration exempted India from sanctions for the port’s development because of the benefits it potentially had for both India and Afghanistan.

A Trump administration official said, “We have provided a narrow exemption for the development of Chabahar that allows for the construction of the port and rail line that allows for the export of refined oil products to Afghanistan.”

Trilateral Rail Link

December saw the first India-Uzbekistan-Iran trilateral working group meeting on the joint use of the port for trade and transit purposes and enhanced regional connectivity.

Notably, Uzbekistan has built a railroad to Afghanistan to connect to Iran’s railroad network that could help it to use Chabahar Port for entering the Indian Ocean region.

Uzbekistan is among two doubly landlocked countries in the world. The other being Liechtenstein. Tashkent over the past five years, buoyed by economic reforms, is seeking to increase its Indian Ocean outreach to overcome its landlocked status.

New Delhi will be inviting Kabul for the next meeting. New Delhi is also pursuing the inclusion of Chabahar Port in the International North-South Transportation Corridor.

INSTC is a major transit route designed to facilitate the transportation of goods from Mumbai in India to Helsinki in Finland, using Iranian ports and railroads, which the Islamic Republic plans to connect to those of Azerbaijan and Russia.

The corridor will connect Iran with Russia’s Baltic ports and give Russia rail connectivity to both the Persian Gulf and the Indian rail network.

This means goods could be carried from Mumbai to the Iranian port of Bandar Abbas and further to Azerbaijan’s Baku. They could then pass across the Russian border into Astrakhan before proceeding to Moscow and St. Petersburg, before entering Europe.

INSTC would substantially cut the travel time for everything from Asian consumer goods to Central Eurasia’s natural resources to advanced European exports.

Chabahar’s Strategic Importance

The strategic port of Chabahar in southeastern Iran is the only oceanic port on Makran coast and has huge significance for India's attempt to increase trade with Central Asian countries.

Chabahar consists of two port terminals: Shahid Kalantari and Shahid Beheshti. The opening of the first phase of Shahid Beheshti Port (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 increases India’s connectivity with Afghanistan.

The transit of goods through Chabahar Port may witness a significant jump soon as India seeks to cooperate closely with Central Asian countries following their stated wish to increase trade along this direction.

Currently, countries can receive up to a 70% discount on the total cost for using Chabahar for transit trade. As per the port authority, loading and unloading figures have already reached 2 million tons, up from the meager 200,000 tons of just a few years ago. India is developing the first phase of Shahid Beheshti section in cooperation with the Iranian government under a trilateral agreement with landlocked Afghanistan.

India's Minister of Ports Mansukh Lal Mandaviya claimed in July 2020 that Indian firms would reduce logistical costs by 20% in container transport to Central Asian countries by using Chabahar Port. At present, these nations can only be reached via China or Europe.

The Indian company, India Ports Global Limited, took over port operations in December 2018 and has since handled more than 1.2 million tons of bulk cargo and about 8,200 containers. Of late, there has been a rise in transit cargo for Afghanistan through Chabahar.