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India, Iran close to new deal on Chabahar Port, long term contract expected soon

The focus is now on completion of the Chabahar Port

India and Iran are rapidly progressing towards signing a long term contract outlining New Delhi’s investments in the strategically located Chabahar port. Most of the nagging issues related to the development of the port that came up between India and Iran have been resolved earlier this month after senior officials and diplomats from both sides held intense talks. A few issues, however, remain but these are expected to be ironed out in the coming weeks. Indian officials are likely to visit Iran in the next few weeks with the aim to resolve these remaining issues.

“Things are moving fast, both sides are working towards resolving issues that have stunted work on the project,” a source told India Narrative.

Amid changing geopolitical contours and Chinese advances, India is keen to press the pedal on completion of the port located in southern Iran at the earliest. The port will also be linked to the International North South Corridor.

According to the Iranian media, Ali Akbar Safaei, chief of the Iranian Ports and Maritime Organization, said that talks on existing disputes regarding the development of the port were held between June 12 and 16.

After all issues are resolved, the long term deal aimed at developing the port will be signed. The port which is strategically located, provides Mumbai a direct link to the landlocked Central Asian countries. The location of Chabahar Port has an advantage for developing it as a transshipment hub as it lies close to some of the busiest trade routes in the world.

Several issues had come up between the two countries which has resulted in a delay in construction of the port.

“As part of the memorandum of understanding among Iran, India, and Afghanistan, so far, an initial investment worth $25 million has been committed to Iran and will be used to develop the port,” Safaei said.

Notably, in May National Security Advisor Ajit Doval paid a visit to Tehran and met Iranian President Ebrahim Raisi.

Raisi underlined the need to take India-Iran ties to a “new level” especially with a focus on economic and commercial engagements.

After some hiccups, India and Iran are rebooting their ties. Recently, India even sent wheat to Afghanistan through the Chabahar Port. “This reflects the rebooting of ties between India and Iran,” an analyst said.

Meanwhile, last year, the Reserve Bank of India gave its nod for using the rupee payment mode for the sanctions hit Iran. India had halted imports from Iran in 2019 after the reimposition of sanctions by the US on the oil rich nation.

“We are looking at a long-term rupee trade not just with Russia but with Iran as well,” Sanjeev Sanyal, Member, Economic Advisory Council to the Prime Minister earlier told India Narrative.

In 2018-19, bilateral trade between New Delhi and Tehran stood at $17.03 billion. However, after a continuous fall—in 2021-22, it dropped to $1.9 billion, the two countries are now aggressively looking at boosting non oil trade.

Also read: India-Iran trade picks up riding on shared geopolitical interests