India had to stave China off to sign Chabahar agreement with Iran

NEW DELHI: India's commercial contract with Iran for development of Chabahar port has come not a moment too soon for the government. Notwithstanding its presence at Pakistan's Gwadar, where it has developed and acquired operational control of the port, China has also looked to invest in the development of Chabahar port.

Only last month, a Chinese consortium visited the Chabahar free trade zone and expressed interest in developing the port and also building an industrial town there. The head of the Chinese consortium which visited Chabahar was quoted as having said that Chinese companies were eager to invest in the strategically located port.

This followed the visit by Chinese President Xi Jinping to Iran in January this year when the two countries mentioned in their joint statement development of ports as one of the areas where they could have tangible cooperation.



The intergovernmental MoU signed by Union minister Nitin Gadkari last year for developing Chabahar was also seen as India's response to the interest shown in the Iranian port by China Harbour Engineering Company which runs the Gwadar port in Pakistan.

India had to move quickly in the past few months not just to sign the contract between IPGPL (India Ports Global Private Limited) and Iranian firm Arya Banader but also a confirmation statement between EXIM Bank and Central Bank of Iran confirming availability of credit up to Rs 3,000 crore for the import of steel rails and implementation of India's Chabahar port commitment.

According to Indian officials, the contract envisages India's investment and participation in the first phase of Chabahar port which involves development of two terminals and five berths with multi-cargo capacity. The contract also comes with specific timelines for its implementation.

India's desperation to seal the contract, in fact, also stemmed from Iran's own conduct in the past few months with Tehran seemingly playing both ends for a while. Even after India had signed the MoU for developing Chabahar last year, Iran's ambassador to India Gholamreza Ansari had warned that India needed to look at benefiting from business opportunities in Iran, once the international sanctions on Tehran were lifted, and not waste time in "cheap negotiations".

The Sistan and Baluchestan governor, Ali Osat Hashemi, hosted another Chinese delegation at Chabahar in October 2015 and announced that Iran would be glad to work with Beijing and provide it with lucrative business opportunities as it had always stood by Iran. He had said he would discuss investment possibilities in Chabahar with both China and Pakistan.

Any sizeable presence of the Chinese in Chabahar will be resented by India even as Beijing's presence grows elsewhere in Iran.
Unlike India, Iran has welcomed China's Maritime Silk Road initiative and, compared to its annual trade volume of $9 billion with India, Iran's trade with China stands at $52 billion.

According to many in the government, Chabahar is also important for India to break free from its strategic encirclement by China, which not only controls the Gwadar port but has also restored its presence in Colombo and Hambantota in Sri Lanka.

It is with Japan that India would like to work with for connectivity in India's neighbourhood and New Delhi will closely look at the outcome of PM Shinzo Abe's visit to Tehran a few months from now. While there is no official confirmation yet, Japan is said to be contemplating developing the port and an industrial complex in the free trade zone.

When asked about the likely involvement of Japan in Chabahar, foreign ministry joint secretary handling Iran, Gopal Baglay, said there could be synergies in promoting regional connectivity. but added that it would depend on how comfortable Iran was with it.