Recent news indicates that Iran has decided to take forward the construction of the Chabahar rail line, unilaterally, due to the delay from India in initiating and financing the project. The key player in question is the Chabahar Port, situated on the Gulf of Oman and conveniently just 72 kilometers away from Pakistan’s Gwadar port, developed by China. The Chabahar port, which is the sole oceanic port of Iran, includes two distinctive ports: Shahid Beheshti and Shahid Kalantari.
Key Points
Iran recently launched the track-laying process for the 628 km Chabahar-Zahedan rail line, aiming to extend it to Zaranj across the Afghanistan border. The targeted completion date is March 2022, with the Iranian Railways planning to use around USD 400 million from the Iranian National Development Fund.
Background Overview
In May 2016, a trilateral agreement was signed among India, Iran, and Afghanistan. The pact involved setting up a Transit and Transport Corridor among these countries, using the Chabahar port as one of the key hubs for sea transportation. Further, plans included construction of a rail line from Chabahar port to Zahedan, bordering Afghanistan, as an alternate trade route to Afghanistan and Central Asia.
The Indian Railways Construction Ltd. (IRCON), a state-owned enterprise, had agreed to provide all services, superstructure work, and finance (around USD 1.6 billion) for the project, signing a Memorandum of Understanding (MoU) with the Iranian Rail Ministry.
The Importance and Hurdles
The Chabahar port is seen as a gateway to new trade opportunities by India, Iran, and Afghanistan with other Central Asian countries, especially given Pakistan’s refusal to grant transit access to India. However, despite several site visits by IRCON engineers and preparations by Iranian railways, India has not started the work. The primary concern is attracting sanctions from the USA, leading India to halt its oil imports from Iran.
The USA did provide a sanctions waiver for the Chabahar port and the rail line, however, it was challenging to procure equipment suppliers and partners due to fears of being targeted by the USA.
Emerging Chinese Involvement
Another significant development is the ‘Comprehensive Plan for Cooperation between Iran and China’, a strategic partnership deal worth USD 400 billion over 25 years. This pact may involve Chinese involvement in Chabahar’s duty-free zone, a nearby oil refinery, and possibly a larger role in the Chabahar port. The collaboration would result in investment in infrastructure, manufacturing, upgrading energy and transport facilities, refurbishing ports, refineries and other installations, and ensuring Iranian oil and gas supplies to China.
Implications and the Way Forward
The Iran-China deal impacts India’s strategic ties with Iran and the use of Chabahar port. For instance, Bandar-e-Jask, located to the west of Chabahar and right before the Strait of Hormuz, could allow China to extend its influence along the Pakistan-Iran coast. These developments should be closely monitored by India, which needs to strengthen its relations with relevant countries. As an emerging power, India’s ambitions are not just confined to South Asia. A peaceful extended neighborhood (Iran-Afghanistan) plays a crucial role in India’s aspiration of becoming a superpower, benefiting trade, and ensuring energy security.
