Production, Investment in Chabahar See Dramatic Growth

EghtesadOnline: The value of products made in Chabahar in Iran’s southeastern province of Sistan-Baluchestan has increased 6.2-fold over the past eight years from 1,240 billion rials ($4.91 million) to 7,728 billion rials ($30.6 million), says Abdolrahim Kordi, the director of Chabahar Free Zone Organization.

News ID: ۷۸۶۳۰۹

10 April 2021

“Domestic investment in Chabahar increased from 630 billion rials [$2.49 million] in the Iranian year ending March 2015 to over 3,000 billion rials [$11.88 million] in the year ending March 2021. Only 20 investment contracts were signed in the year ending March 2015. As we speak, seventy-five contracts have been finalized with investors,” he was quoted as saying by IRNA on Wednesday.

“The Iranian year ending March 2018 could be regarded as a turning point in the history of foreign investments in Chabahar: Upwards of $63 million in foreign investment were materialized then. However, the US sanctions drove down investment to $7 million in the fiscal 2018-19. The figure rebounded in the following year and has remained on an upward trajectory thus far. As much as $16 million in foreign investment were made in Chabahar in the year ending March 2021,” he said.

“A total of 245 companies were registered in Chabahar Free Zone in the year ending March 2015. The number of registered companies increased to 489 in the year ending March 2019; 228 and 180 more firms were added in the year ending March 2020 and March 2021, respectively. A total of 290 manufacturing enterprises and 2,555 new jobs were created in Chabahar in the last year.”

Developed by India

India has supplied the second shipment of equipment to Chabahar Port in Iran, Union Minister Mansukh Mandaviya said recently.

In January, India had supplied a consignment of two mobile harbor cranes to Chabahar Port, having a total contract value of over $25 million.

Located on the energy-rich Iran's southern coast, the port is being developed by India, Iran and Afghanistan to boost trade ties.

"Continuing with our commitment to develop Chabahar Port, second shipment of equipment reaches Shahid Behesti Terminal," Ports Shipping and Waterways Minister Mansukh Mandaviya said in a tweet.

In February, Ports, Waterways and Shipping Additional Secretary Sanjay Bandopadhyaya said two more cranes are standing for loading near the port near Venice, Austria, which will reach by March-end to Chabahar Port, Press Trust of India reported.

He had said two more cranes will be supplied to the port by June-end.

Bandopadhyaya said after mobile harbor cranes are delivered, there are plans to procure rail-mounted cranes for which bidding is going on.

By January 31, 2021, about 123 vessels had berthed at the terminal and approximately 13,752 TEUs and 18 lakh tons of bulk/ general cargo had been handled there.

The bilateral contract between Iran and India was signed on May 23, 2016, with a total value of $85 million for equipping, mechanizing and starting operations at the port under the first phase.

In this regard, a special purpose vehicle – India Ports Global Ltd (IPGL), Mumbai – was incorporated under the shipping ministry.

The development of Chabahar Port will help expand economic and mutual relations between India and Iran as well as give a further boost to maritime trade between both the countries.

The location of Chabahar Port has strategic advantage and high potential to provide connectivity among India, Iran, Afghanistan, Uzbekistan and other Commonwealth of Independent States members, especially eastern CIS nations, and boost trade.

Full Operations Expected by May End

India expects to start full-scale operations at Iran’s Chabahar Port it has built by the end of May, the country’s shipping minister said in a boost for regional trade.

India has been developing a part of the port on Iran’s southeastern coast along the Sea of Oman as a way to transport goods to Iran, but also Afghanistan and Central Asian countries, and avoiding rival Pakistan, Reuters reported.

But US sanctions on Iran slowed down the port’s development and Indian officials are now counting on a thaw in relations between Washington and Tehran under President Joe Biden to move forward with near $500 million of investments.

“I am expecting to visit Iran in April or May for the inauguration of full operations,” Mansukh Mandaviya, India’s ports and shipping minister, told Reuters.

India is developing two terminals at the port, including the Shahid Beheshti terminal and under an agreement signed with Iran, it would run the terminal for 10 years.

Mandaviya said the port had already commenced operations in a limited way and the growth potential was evident.

Chabahar Port had handled 123 vessels and 1.8 million tons of bulk and general cargoes from February 2019 to January 2021, he said.

“This is much higher than our expectations. Imagine the scale of operations and freight saving once it is fully operational,” he said.

Last year amid the pandemic, India used Chabahar Port to send 75,000 tons of wheat as humanitarian assistance to Afghanistan and 25 tons of the pesticide malathion to Iran to deal with a locust invasion.

The second batch of 25 tons has recently reached Chabahar.

As part of the agreement with Iran, India would provide six cranes and other equipment worth $85 million to equip and operationalize the Shahid Beheshti terminal.

“Chabahar Port has emerged as the connecting point for the region to deliver humanitarian assistance during the Covid pandemic,” Mandaviya said.

India also plans to set up a 600-km rail line from Chabahar Port to Zahedan, the provincial capital of Sistan-Baluchestan in Iran close to the Afghan border, at a cost of $1.6 billion to facilitate the movement of goods to Afghanistan.

“New Delhi has also proposed the inclusion of Chabahar Port in the International North-South Transport Corridor, connecting Mumbai with Moscow,” the minister said.

The INSTC project, proposed by India, Russia and Iran in 2000, and later supported by 10 other Central Asian countries, envisions a 7,200-km multimodal network of ship, rail and road for freight transport, aiming to cut carriage costs by about 30% and transit time from 40 days to about 20 days.