India and Iran have further narrowed differences on a proposed 10-year pact for operations at the strategic Chabahar port, which is expected to be signed following political clearance from both sides.
The two sides are also exploring ways to “recharge” the rupee vostro account held by the Iranian side, following the depletion of its reserves in recent months, to facilitate Indian exports of commodities such as rice, tea and pharmaceuticals.
Besides divergences on a clause related to jurisdiction for arbitration, the long-term agreement on Chabahar port has been held up by a few other issues. “We have narrowed the gap on the major issue of arbitration and made progress on the other matters,” one of the people cited above said.
“Political clearance from both sides is needed for signing the long-term agreement. We are covered for now as the initial agreement for India’s operations at Shahid Beheshti terminal in Chabahar port has been renewed for this year,” he said.
On the issue of arbitration, the two sides are looking at the option of taking up these matters at arbitration courts in a location such as Dubai, the people said.
A long-term agreement on Chabahar port is expected as differences over the arbitration clause have been narrowed, a second person added.
Iran can use the port located on the Makran coast for the trans-shipment of goods such as tea, eatables, electronics, building materials and heavy equipment to places like Afghanistan and Central Asia. The port is also strategic for India as it provides access to West Asia and the Central Asian republics, the second person said.
The proposed pact was discussed by Iranian foreign minister Amir Abdollahian and Iran’s envoy to New Delhi, Iraj Elahi, at a meeting in Tehran in August. Abdollahian stressed India’s importance in Iran’s “Look to the East” policy and expressed optimism that a “definitive deal” with India for expanding Chabahar port will be concluded soon, Tehran Times reported.
Meanwhile, the depletion of rupee reserves held by the Iranian side in the vostro account has already hit Tehran’s ability to import commodities such as basmati rice and tea. Iran has been either the largest or second-largest importer of Indian basmati since 2014-15, according to government data, and it bought 998,879 metric tonnes of aromatic rice in 2022-23.
