India and Iran set to sign landmark Chabahar Port contract post-2024 elections
Despite the initial agreement, the expansion of the port was hindered by a number of geopolitical issues, notably the recurrence of western sanctions against Iran
Following the Lok Sabha elections in 2024, India and Iran are expected to finalize a major deal that has been negotiated over more than two decades. The agreement will solidify the growth of the crucial Chabahar port, signifying a turning point in the two countries’ bilateral ties. Southeast Iran’s Chabahar port is regarded as a key entry point for Indian trade with Central Asian nations. Iran and India have worked together since 2003, when Iranian President Muhammad Khatami visited India and the two nations decided to construct the port and the infrastructure that goes along with it.
Despite the initial agreement, the expansion of the port was hindered by a number of geopolitical issues, notably the recurrence of western sanctions against Iran, which made it difficult for India to support the port’s growth. India and Iran inked an agreement in 2016 that called for a $8 billion investment in the port of Chabahar. India seized control of the port’s operations in 2018, and in disregard of sanctions, it has been building the port’s infrastructure. Six mobile harbor cranes, valued at $25 million, have been supplied by India thus far to help with the port’s construction.
The long-term agreement, which might last for ten years, intends to accelerate the full utilization of Chabahar port. Prior agreements could only be made for shorter periods, usually a year. After disputes over arbitration clauses were settled, the future contract represents a significant advancement as it will now follow the guidelines established by the UN Commission on International Trade Law (UNCITRAL).
The Gwadar port in Pakistan, which is controlled by China, is strategically offset by India’s port of Chabahar. Bypassing Pakistan, it gives India, a straight path to Afghanistan and Central Asia. Economically speaking, the port is anticipated to improve connection and trade in the area, boosting the local economies. It is a component of the International North-South Transport Corridor (INSTC), an initiative to shorten the shipping routes between Europe, Central Asia, and Russia.
The contract’s completion coincides with a spike in West Asian geopolitical activities. Iran is keeping a careful balance in its foreign policy, particularly concerning India, as seen by its recent military engagement with Israel and its refusal to back Pakistan on the Kashmir problem.
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