May 29, 2024

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India And Iran Sign Long-Term Bilateral Contract On Chabahar Port Operations.

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Tehran/New Delhi, 13 May 2024: The Long Term Bilateral Contract on Chabahar Port Operation was signed between Indian Ports Global Limited (IPGL) of India and the Port & Maritime Organisation (PMO) of Iran, enabling the operation of Shahid-Behesti in Chabahar Port Development Project for 10 years. The Union Minister of Ports, Shipping & Waterways, Sarbananda Sonowal along with His Excellency Mehrdad Bazrpash, Minister of Roads & Urban Development, Iran attended the historic signing of agreement ceremony held here today. Earlier, A Memorandum of Understanding (MoU) for the development of the Chabahar Port by India was signed in May 2015. Thereafter, the contract was executed on 23rd May 2016 in Tehran (Iran) during the visit of the Hon’ble Prime Minister of India to Iran. 

This agreement aims to enhance regional connectivity and facilitate trade, particularly between India, Iran and Afghanistan. The India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, facilitated the first consignment of exports from Afghanistan to India in 2019. The operations continued through short-term contracts while negotiations on the Long Term Agreement peaked pace with the visit of Union Minister Sarbananda Sonowal to Chabahar in August 2022. This 10-year long-term lease agreement further strengthens the bilateral ties between the two countries while bolstering confidence & boosting the trust of trading communities from the region.

Speaking on the occasion, the Union Minister of Ports, Shipping & Waterways and Ayush, Sarbananda Sonowal said, “Today is a historic day for the maritime sector of the region as India and Iran signed this Long Term Agreement on Chabahar Port heralding a new age of trade, marine cooperation as well as transhipment while boosting trilateral trade among India, Iran and Afghanistan. As India continues to invest in Chabahar Port, its efficiency and capacity will be further enhanced, solidifying India’s commitment to the region’s economic development. Under the dynamic leadership of Prime Minister Shri Narendra Modi ji, India’s sustained engagement in Chabahar underscores its role as an anchor for Indian trade in the region while enhancing its role in the Global Supply Chain. India will use the port for humanitarian aid shipments reaffirming its commitment to support regional development beyond commercial interests, showcasing its commitment to fostering goodwill and stability in the region.”

Adding further, Sarbananda Sonowal said, “Chabahar Port’s significance transcends its role as a mere conduit between India and Iran; it serves as a vital trade artery connecting India with Afghanistan and Central Asian Countries. This linkage has unlocked new avenues for trade and fortified supply chain resilience across the region. Under the leadership of Prime Minister Shri Narendra Modi ji, India is on its way to becoming a major maritime player with a formidable supply chain network. The establishment of regular ship calls between Chabahar Port and Indian ports has instilled stability and confidence among traders, offering them visibility and predictability in their supply chain operations.”

Reaffirming Chabahar Port investment for boosting India’s economic growth, Sarbananda Sonowal said, “As envisaged by the Prime Minister, Shri Narendra Modi ji, this project is also about encouraging Indian entrepreneurs to venture into the region from long-term prospects. The port’s integration with a Special Free Zone augments its appeal, while India’s incentives, such as concessions on vessel-related charges and cargo charges, bolster trade flows through Chabahar, fostering economic growth and cooperation. While we are optimistic about a growing trade with a favourable Balance of Trade, this is an opportunity for India’s business entities to expand their footprints in the bourgeoning Central Asian region. I must thank the leadership of Iran for their cooperation and support. The invaluable guidance by Prime Minister Shri Narendra Modi ji turned this project into a viable reality with a long-term outlook.” 

As part of the agreement, India will procure MHCs, RMQCs, RTGCs, Reach Stackers, Forklifts, Pneumatic Unloaders etc at Chabahar Port. The agreement paves the way for enhanced trade and investment opportunities which will potentially boost India’s economic development. 

Located in the Sistan-Baluchistan province on Iran’s southwestern coast, the Chabahar port is an important point on the Arabian Sea with easy access from India’s west coast. Kandla port in Gujarat is the closest to the Chabahar port at 550 Nautical Miles while the distance between Chabahar and Mumbai is 786 Nautical Miles. Since 2019, it has handled container traffic of more than 80,000 TEUs and Bulk and General Cargo of more than 8 million tones.

The Chabahar port project fosters trade ties and strengthens economic interdependence. The port aims to become a multiplier of economic activity in the region as well as creating job opportunities. Strategically situated, the port offers an alternative transit from the Strait of Hormuz for cargo traffic between Central Asian Countries and Afghanistan. This diversification strengthens India’s strategic position in the region.

The port’s integration with a special free zone augments its appeal, while India’s incentives, such as concessions on vessel-related charges and cargo charges, bolster trade flows through Chabahar, fostering economic growth and cooperation.

Chabahar is envisaged as a crucial link in the eastern route of the International North-South Transport Corridor (INSTC), facilitating the movement of goods between India and Central Asian Countries. This collaboration between India and Iran on developing infrastructure and logistics along the 7,200 km INSTC aims to reduce transportation costs and time, thereby promoting trade between these regions.

The continued development of Chabahar port promises a bright future for regional trade. As cargo volumes rise and infrastructure expands, Chabahar has the potential to become a vital economic hub, not just for India and Iran, but for the entire region. This project serves as a powerful example of how international collaboration can unlock economic growth and prosperity.

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