CHABAHAR PORT: A BOON TO TRADE IN CENTRAL ASIA

Boosting economic activity in Central Asia, Chabahar Port provides Afghanistan, a landlocked country, an alternative access to a sea port. Iran would benefit from increased trade, earn transit fees and witness major infrastructural investments and developments. India stands to gain an alternate access to Afghanistan and central Asia via Iran, considerably cutting on transportation costs and time.

Hailing it as a major breakthrough for India\’s trade with West Asia, the Chabahar Port deal comes into reality. The major strategic initiative of India Port Global Private Limited is a big leap in the enhancement of trade with Iran, Afghanistan and CIS countries. Talking at length about the strategic initiative, Arun Kumar Gupta, MD, India Ports Global, said India would develop two terminals at Chabahar, one container terminal and another multipurpose terminal. “While the container terminal would handle almost all containerized goods, the multipurpose terminal will be built primarily to handle the project cargo which would be required for setting up of various projects in the West Asian region. Apart from the development of the port, IRCON International intents to built 500 km of rail link from Chabahar to Zahedan, in Afghanistan. Similarly state run NALCO also plans to set up an aluminum smelter plant at Chabahar free trade zone.”

Strategically located

Chabahar is the only Iranian port with direct access to the ocean. This port offers easey access to Oman Sea, Persian Gulf, Afghanistan and Central Asia through land route. It is close to the mainline shipping routes to Africa, Asia and Europe and can act as a gateway to the Eastern Transit Corridor to Afghanistan as well as the landlocked countries of Central Asia. India had spent about $100 million to construct a road from Delaram in Afghanistan to Zaranj at the Iran-Afghanistan border. Iran has established the road contact with Afghanistan through \’Garland Road,\’ which links to Central Asia, Europe, Russia and the international North-South transport corridor (INSTC) via the Chabahar Port. “Chabahar Port offers the shortest land access to Afghanistan and central Asia and the Port and Rail link will provide sea connectivity to the road built,” adds Gupta.

Project and investment

The meeting between Prime Minister Modi and the Iranian president Hassan Rouhani in Ufa, Russia, in July, 2015 had provided impetus to the protracted negotiations. After lifting the ban on Iran the development of Chabahar Port received further boost. India Ports Global, a joint venture of Jawaharlal Nehru Port Trust and Kandla Port Trust, have signed a contract with Iran\’s Aria Banader Company to operate the port. The contract is for ten years and can be extended when second phase evolves. The joint venture company will invest $85 million in equipping the terminals. EXIM Bank of India will offer a $150 million line of credit. The bank has extended credit lines worth Rs.3,000 crore under the Export Development Fund to seven Iranian banks for using the funds to import steel rails from India. India will supply $400 million worth steel for construction of rail line between Chabahar and Zahedan. IRCON will build a rail line at Chabahar to move goods right up to Afghanistan. India\’s aim is to provide goods to Afghanistan through an efficient multimodal transport.

Win-win situation for all The trilateral agreement on transport between India, Iran and Afghanistan will use the port’s strategic location to boost regional economic cooperation and connectivity. The agreement provides Afghanistan an alternate access to sea port, boosting its economy by connecting to international markets. Iran benefits from increased trade, transit fees and major infrastructural investments and developments. India will gain an alternate access to Afghanistan and Central Asia via Iran, easily accessible from Mumbai and Kandla.

Counter to China
The Chabahar Port will also allow India to counter China\’s expanding influence in the Indian Ocean region. The port is just 100 km from Pakistan’s Gwadar Port, which is being developed by China. Chabahar Port will definitely dent the traffic at Gwadar Port as it will offer a viable alternative, particularly considering that the hinterland access from Chabahar far outweighs that from Gwadar. The Gwadar port’s competition for trade and transport will come from Chabahar, as a port outside of the Persian Gulf makes sense from a strategic and logistical view point for Iran for trade with Afghanistan and Central Asia.

Chabahar to divert traffic from competitors
Once Chabahar Port is fully commissioned, there could be at least diversion of 1 per cent traffic from other ports in Iran. This is because of geo-strategic location of Chabahar being at the mouth of the Persian Gulf, offering advantage in terms of shorter maritime transit, ease of navigation and adequate infrastructure (land and water side) to accommodate vessels up to 14 m draft. Thus for all estimations, diversion volume of 5 per cent has been estimated, particularly from Bandar Abbas Port since it is the single major port handling cargo in high volumes.

Gateway to mineral rich landlocked CIS countries
Afghanistan, Central Asian states, particularly, Turkmenistan, Uzbekistan and Kazakhstan hold huge reserves of natural resources, particularly coal, iron ore, mineral ores and fertilizer. India can source minerals from these markets, so it is expected to serve the two-fold purpose of opening up these landlocked economies to the world, enabling them to move their import requirements at least cost and also exploiting their vast untapped natural resources. Thus as an economic edifice, Chabahar will trigger vibrant economic activity in Central Asia. In the long run, Chabahar can open up a new and shorter land bridging option to European market.