PM Modi in Iran: India commits $500 mn to develop Chabahar port and infra

Prime Minister Narendra Modi's Iran tour has become a historic one after the country signed as many as 12 pacts including a contract to develop the first phase of strategic Chabahar port.

In a joint statement, Modi and Iranian President Hassan Rouhani today stressed that said both the countries can improve their economic co-operation.

“We should perceive the agreement as an engine of growth, and I believe it is the beginning of a new era in the Indo-Iran relationship, which was started by Vajpayeeji and Modiji is opening the gate for it,” Minister for Road Transport and Highways and Shipping Nitin Gadkari was quoted as saying in a report in ANI earlier in the day.

Here's an all you need to know about the deal:

 PM Modi in Iran: India commits 0 mn to develop Chabahar port and infra

PM Narendra Modi meets Iranian President Hassan Rouhani in Tehran. Twitter @MEAIndia

What is the deal all about?

Indian Ports Global Pvt, a joint venture between the Jawaharlal Nehru Port Trust and the Kandla Port Trust, will sign a contract with Arya Bandar Company of Iran for developing two terminals and five multi-cargo berth in Phase-1 of the Chabahar port project.

Indian investment in phase-1 will be about $500 million.

An MoU to develop the port was signed in May 2015 between Gadkari and Iran’s Minister for Transport and Urban Development Dr Abbas Ahmad Akhoundi. Modi is now signing the contract to develop the port.

Why is the agreement important?

Chabahar is in South-East Iran and a port here will help India skip Pakistan and open up a route to land-locked Afghanistan with which New Delhi has developed close security ties and economic interests.

From Chabahar port, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 km from the port. The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan's Garland highway, setting up road access to four major cities -- Afghanistan-Herat, Kandahar, Kabul and Mazar-e-Sharif.

The port will be used to ship crude oil and urea, saving India transportation costs. India intends to lease two berths at Chabahar for 10 years. The port will be developed through a special purpose vehicle (SPV) which will invest $85.21 million to convert the berths into a container terminal and a multi-purpose cargo terminal.

"The distance between Kandla and the Chabahar port is less than the distance between New Delhi and Mumbai, and so what this agreement does is to enable us quick movement of goods first to Iran and then onwards to Afghanistan and Russia through a new rail and road link," Gadkari was quoted as saying in a PTI report.

Complementing the agreement is the signing of a trilateral agreement on transport and transit corridor among India, Afghanistan and Iran.

Sources told PTI that talks will feature Indian state-run firms securing rights to develop the offshore Farzad-B gas field, which was discovered by ONGC Videsh. The trilateral agreement is seen to significantly enhance prospects of Indias connectivity with Afghanistan, Central Asia and beyond such as the North-South corridor.

What experts are saying?

C Raja Mohan says in an article in The Indian Express that the Chabahar project "has the potential to alter the hostile regional geography that Delhi had inherited in 1947". According to him, the move deserves credit as it is a break from the past governments' lack of political will "to pursue declared strategic objectives towards Iran."

The UPA government had dilly-dallied with the idea for about 10 years as the the US wanted India and other countries to not “rush” into doing business with Iran as Washington was in the process of working out a deal with Tehran on the latter’s contentious nuclear programme.

"The Chabahar Port will be a game changer for India because it will provide connectivity to Afghanistan, Iran and Eurasia, strategically outflanking an intransigent Islamabad. It is also a counter to the China-Pakistan Economic Corridor (CPEC)," says this report in The Hindustan Times.

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

Updated Date: May 23, 2016 15:22:46 IST