10 June 2024 – The Hindu

Investments of Strategic Importance Made by India in Chabahar

• The recent signing of a ten-year contract between India and Iran for the operation of a terminal at the strategically positioned Chabahar port marks an important milestone in India’s efforts to expand its connectivity and influence in the wider Central Asian area. The contract was signed by India and Iran. During the course of the agreement, India will make an investment of around USD 120 million to develop and run the Shahid Beheshti Terminal in Chabahar. Additionally, India will provide a credit window of $250 million for the purpose of upgrading the infrastructure.
• Despite the fact that Chabahar Port is strategically significant, India’s engagement in the port faces a number of hurdles. In order for India to achieve success, it requires diplomatic dexterity, infrastructure improvements, and a variety of connection alternatives.

The Chabahar Port Project is what exactly?

• Located in the Sistan Baluchistan province of Iran, Chabahar is a deep-water port. The name of the port comes from the Persian phrase for “four springs.”
• The fact that it is situated in the open ocean makes it convenient and safe for huge cargo ships to access there.
• This region is located in close proximity to both the Gulf of Oman and the Strait of Hormuz, and it was described by an Iranian scholar named Al Biruni in the tenth century as the entry point to the subcontinent.
• The Kandla port in Gujarat, India is located around 550 nautical miles away from this location.
• The Shahid Beheshti and the Shahid Kalantari are the two terminals that are located within the Chabahar port property.
• It is only at the Shahid Beheshti terminal that India has made an investment.
• It is being done in four stages that the development of the port is being done. Its capacity will be 82 million tonnes per year after it is finished being constructed.

In relation to the development of Chabahar Port, what is the timeline that must be followed?

• Concentration on Trade Routes and Shifts in Geopolitical Power (1990s-2000s)
• The decade of the 1990s saw India make a strategic shift towards trade routes as a fundamental component of its geopolitical defence policy.
• At the end of the 1990s, India and Iran increased their level of collaboration in response to the advent of the Taliban in Afghanistan.
• Between the years 2002 and 2003, early engagement and strategic cooperation.
• Beginning in 2002, India and Iran began having conversations on the possibility of establishing Chabahar Port. It was in accordance with India’s rising economic needs and the country’s goal to circumvent Pakistan by establishing alternate trade routes to Central Asia.
• There was a strategy for strategic cooperation between India and Iran that was agreed in 2003. This roadmap included the development of Chabahar Port.
• On the other hand, the United States’ decision to classify Iran as a member of the “Axis of Evil” under the administration of President George W. Bush resulted in pressure being applied to India, which halted major progress.
• Since 2010, we have made significant progress and reached agreements.
• In the early 2010s, India maintains its commitment to Chabahar and makes an investment in a road that goes from Delaram, Afghanistan, to Zaranj, which is located on the border between Iran and Afghanistan, in order to increase access. Despite this, the overall development of the project continues to be slow.
• In 2015, Iran and the P-5+1 nations made significant progress in their negotiations, which paved the ground for further advancements in Chabahar.
• 2016: The signing of the Trilateral Agreement between India, Iran, and Afghanistan; the establishment of the International Transport and Transit Corridor; and the acceleration of Chabahar’s development.
• The first phase of the Shahid Beheshti terminal was inaugurated in 2017, marking a crucial milestone in the process of Chabahar’s operationalization.
• It is a demonstration of the port’s functionality that India sends its first consignment of wheat to Afghanistan through Chabahar.
• The incorporation of India Ports Global Limited (IPGL) as a significant partner in the development of Chabahar in 2015, in accordance with India’s strategic objectives.
• The International Ports Group (IPGL) assumes control of Chabahar operations in 2018, which results in significant cargo handling and humanitarian aid initiatives through the port.
• It was utilised to supply Iran with pesticides that were friendly to the environment in the year 2021.

Existing Situation (at the Present Time):

• IPGL was awarded a contract to operate a terminal at Chabahar Port for a period of ten years, which was signed between India and Iran. Because of this, India has demonstrated its long-term commitment to the development of Chabahar, both strategically and economically.
• In what ways does the Chabahar Port play a significant role for India?
• In order to counterbalance China’s String of Pearls Strategy, China has developed important facilities in a number of different sites, including Chittagong, Karachi, and Gwadar in Pakistan, Colombo and Hambantota in Sri Lanka, and Kyaukphyu in Myanmar.
• Despite the fact that they are being marketed as commercial enterprises, these may very quickly become Chinese naval bases in the event of a conflict involving India.
• Within the context of the Necklace of Diamond Strategy, Chabahar functions as a strategic counterweight for India. This gives India the ability to keep an eye on Chinese activity in the region and has the potential to disrupt China’s “String of Pearls” plan of encircling the region.
• Keeping Connectivity Amid the Turmoil in West Asia The continuous conflicts and tensions in the West Asian region, such as the crisis in Yemen and the recent escalation between Iran and Pakistan, have caused disruptions to critical maritime trade routes. Making sure that connectivity is maintained is essential.
• By providing India with an alternate route for its commercial interests, Chabahar helps to reduce the country’s reliance on conventional chokepoints such as the Strait of Hormuz.
• Enhancing India’s Role in the New Great Game The competition for influence in Central Asia, which is frequently referred to as the “New Great Game,” has become more intense as a result of the participation of several major powers, including the United States of America, China, and Russia.
• India is able to leverage its economic and strategic interests in the region as a result of Chabahar, which boosts India’s position in this geopolitical conflict.
• In order to facilitate India’s Extended Neighbourhood Policy, Chabahar is in accordance with India’s “Extended Neighbourhood Policy,” which seeks to increase India’s influence and engagement in regions that are beyond its immediate neighbourhood.
• India is able to project its soft power and economic dominance in the region because to the port, which serves as a crucial gateway to Central Asia.
• Chabahar is a key link in the International North-South Transport Corridor (INSTC) project, which aims to reduce transportation time and costs for the movement of goods between India, Iran, Afghanistan, Russia, and Europe. This is in comparison to traditional routes such as the Suez Canal, which has recently become an international issue related to transit. Chabahar is a key link in the INSTC project.
• When compared to the Suez Canal route, the INSTC route is expected to take fifteen days less to transport shipments, as according to estimations provided by the industry.
• Take note
• Besides the development of the Chabahar port in Iran, India is also working on the construction of a deep sea port in Sabang, Indonesia. Additionally, India will provide assistance to Bangladesh in the process of refurbishing the seaport in Mongla. at the year 2016, India built a port at Sittwe, Myanmar, that is equipped with deep water.
• In relation to the Chabahar Port Project, what are the most significant challenges that India is facing?
• Navigating the India-U.S.-Iran Triangle: As tensions between the United States and Iran continue to fluctuate, India confronts the problem of ensuring that its investments in Chabahar do not bring secondary sanctions from the United States. Such sanctions might put India’s larger economic and strategic connections with the United States in jeopardy.
• Additionally, the new sanctions that the United States has imposed on Iran as a result of its drone strikes on Israel have increased the possibility that businesses will shun participating in Chabahar.
• Iran’s political environment is marked by instability, and the country’s internal disputes and political instability have the potential to interrupt the continuity of projects.
• The ongoing conflict between Israel and Gaza, as well as the widespread disruption of marine traffic in the Red Sea, which is caused by armed organisations supported by Iran, contribute to an increase in regional instability.
• Iran is ranked 127th out of 190 nations in terms of the ease of doing business, as reported by the World Bank. This ranking is indicative of the difficult environment in which businesses operate in Iran.
• Iran’s Openness to China and Pakistan: Iran has maintained its willingness to accept investments from China and Pakistan in Chabahar, in addition to India.
• For example, India’s decision to withdraw from the Chabahar-Zahedan railway project in 2020 was indirectly related to Iran’s investigation of a 25-year agreement with China (which would include USD 400 billion for the development of infrastructure).
• Reconciling Divergent Regional Priorities The engagement of India in Chabahar has the potential to affect its relations with key regional parties such as Saudi Arabia and Israel. These countries perceive Iran as a factor that contributes to instability in the region.
• Concerns Regarding the Environment The sensitive ecosystem of the Gulf of Oman, which is where Chabahar is located, is susceptible to pollution as a result of increasing marine traffic and the possibility of oil spills.
• If environmental issues are not addressed in a proactive manner, they have the potential to attract international criticism and make project funding more difficult. This is in contrast to concerns over competition or sanctions.

What kinds of actions can India take to reduce the problems that are associated with Chabahar?

• Multilateral Financing system: In order to finance the Chabahar project, India can investigate the possibility of establishing a multilateral financing system that would involve countries who share similar values.
• Countries such as Russia, or even some European nations that have an interest in the International North-South Transport Corridor, could be involved in this scenario.
• In order to protect the project from the potential adverse effects of unilateral sanctions or political pressures, it might be beneficial to have a diversified group of investors.
• In order to avoid the perception of the Chabahar project as a purely bilateral initiative between India and Iran, India may choose to strive towards regionalizing the project.
• One way to accomplish this would be to extend invitations to regional stakeholders, such as the countries of Central Asia, to take part in the infrastructure development and operation of the port.
• Their participation has the ability to alleviate tensions with these countries and assist alleviate concerns regarding Iran’s influence that is destabilising international relations.
• Creating a “Green Shipping Corridor” in the region is something that India may undertake to position Chabahar as a pioneer in the process of constructing such a corridor.
• Through the implementation of high environmental standards, the adoption of environmentally friendly technologies, and the promotion of sustainable practices, the port has the potential to attract international cooperation and financing from organisations that are preoccupied with environmental sustainability.
• This could be helpful in addressing concerns about the impact on the environment and garnering support from a wider audience.
• India has the potential to utilise Chabahar in order to develop a “Digital Silk Road” in the region, in addition to the physical connectivity goals that it has set for itself.
• This may involve the development of digital infrastructure, the promotion of electronic commerce, and the facilitation of data flows across international borders along the INSTC.
• The inclusion of such a digital component has the potential to entice investments from technological businesses, so increasing the project’s stakeholder diversity and decreasing its reliance on conventional actors who are impacted by geopolitical conflicts.
• The use of soft power diplomacy in the region could be an effective way for India to supplement its economic initiatives in the region. Cultural interactions, educational alliances, and people-to-people efforts involving countries along the INSTC route could all fall under this category.
• Building goodwill, fostering understanding, and potentially easing geopolitical tensions that could have an effect on the Chabahar project are all possible outcomes that could result from such efforts.