India & Iran signed 10-year agreement for operations at Chabahar port

The long-term agreement was being negotiated by the two sides over the past three years or so and had been primarily held up by differences on a clause related to arbitration

Ports and shipping minister Sarbananda Sonowal left for Iran on Monday for the signing of a crucial long-term agreement for India’s operations at the strategic Chabahar port, people familiar with the matter said.

The long-term agreement, which will be valid for 10 years and will be extended automatically, was being negotiated by the two sides over the past three years or so and had been primarily held up by differences on a clause related to arbitration.

It will replace an initial pact inked in 2016 that covered India’s operations at Shahid Beheshti terminal of Chabahar port and has been renewed on an annual basis.

Sonowal flew from New Delhi to Tehran on a special Indian Air Force (IAF) flight and sources from both sides said his visit was linked to the signing of the 10-year agreement for operations by state-run India Global Ports Limited (IGPL) Shahid Beheshti terminal.

Sonowal’s visit amid India’s general election emphasises the importance attached by New Delhi to Chabahar port and its place in ambitious plans to forge greater connectivity with Iran, Afghanistan and the landlocked Central Asian states.

The move also comes at a time when China has been showing greater interest in investments in ports and other coastal infrastructure in Iran, with Tehran pressing Beijing to take up the development of other terminals at Chabahar port.

Both India and Iran see Chabahar as a hub for the International North–South Transport Corridor (INSTC) that will allow shipping companies to use an alternative route that bypasses the sensitive and busy Persian Gulf and Strait of Hormuz.

Since IPGL began operations at Shahid Beheshti terminal in late 2018, it has handled more than 4.8 million tonnes of bulk cargo, including trans-shipments from Australia, Bangladesh, Brazil, Germany, Russia and the United Arab Emirates.

India took up development of Shahid Beheshti terminal under a tripartite agreement on Chahbahar signed with Iran and Afghanistan in May 2016.

Afghanistan is effectively no longer part of the arrangements since the takeover of the country by the Taliban in 2021, though Chabahar port has benefited from a US waiver on sanctions imposed on Iran.

India pledged it would invest $85 million in the terminal and has so far supplied cranes and other equipment worth some $24 million.