Why Iran’s Chabahar Port is Strategically Important for India – Explained

India has taken one step forward to expand trade with Central Asian countries by signing a crucial Chabahar Port agreement with Iran for 10 years. The Chabahar Port is located on the Gulf of Oman and is a crucial gateway for Indian commodities to access landlocked Afghanistan and Central Asia. This will be accomplished through the implementation of the International North-South Transport Corridor, a road and rail project that will bypass Pakistan.

Under the pact, India will invest around $120 million to develop and operate the Shahid Beheshti Port in Chabahar besides offering a credit window of $250 million for infrastructure upgradation. The Chabahar port is about 550 nautical miles from Kandla port in Gujarat which gives India easy access to Afghanistan, Central Asian countries, and Europe.

Origin and scope

In 2003, India offered to develop the Chabahar Port, a year after Pakistan and China signed a deal to build the $248 million deep sea port at Gwadar. However, a formal agreement was signed only in 2015. The construction of the port received momentum when India pledged an investment of $500 million.

India and Iran along with Afghanistan signed an MoU to build a trilateral transit and transport corridor among the three nations. The Chabahar project comprises two ports – the Shahid Beheshti and Shahid Kalantari. The first phase was inaugurated in 2017 following which India sent wheat to Afghanistan using the Chabahar port.

India is already operating the Chabahar port under the existing limited-scope agreement. Till now, India has used the port to send 20,000 tonnes of wheat as aid to Afghanistan and environment-friendly pesticides to Iran. Here’s a look at India’s trade with Iran via Chabahar port and other ports reported from Jan 2023 to Mar 2024.

Why it matters?

Chabahar means ‘four springs’ in Persian language. It is a deep-water port in the Sistan and Baluchestan province of Iran. Located in the open sea, it provides easy and secure access for large cargo ships. It is close to the Gulf of Oman as well as the Strait of Hormuz, which is an important trade route linking West Asia to Asia, Europe, and North America.

Chabahar is also a part of the International North-South Transport Corridor (INSTC). This corridor will link the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and to northern Europe via Saint Petersburg. It is anticipated that shipments through the INSTC route will take 15 days less compared to the Suez Canal route.

Chabahar Port is easily accessible from Gujarat and Mumbai. The distance between Kandla port and Chabahar is less than the distance between Mumbai and Delhi. A road of 218 km built with India’s support goes from Chabahar up to Zaranj in Afghanistan which will give access to four major cities – Herat, Kandahar, Kabul, and Mazar-e-Sharif. Once fully operational, it will also be an easier way to connect Central Asian countries including Kazakhstan and Turkmenistan.

Also, from a strategic point of view, India will be able to monitor China’s activities in the Persian Gulf through its Chabahar footprint. With the Adani group already operating the Haifa port in Israel, Chabahar will strengthen India’s presence on this route.  

India’s focus on Central Asia

From Chabahar port, India will be able to boost its trade with Central Asian countries including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. According to a report, India exported goods worth USD 446 billion to the world in 2023, and USD 153 billion during January and April 2024. In this, how much goods India exported to Central Asian countries? Find from the chart and table given.

India’s imports from the world totalled USD 735 billion in 2023, and USD 245 billion during Jan-Apr 2024. Below given chart and table show India’s imports from Central Asian countries in 2023 and 2024.

Chabahar Port will open the road to India’s trade with Afghanistan bypassing Pakistan

Transporting goods to Afghanistan through the Chabahar port will be easier than through land over Pakistan which is fraught with risks. When India started a plan with Iran on Chabahar port, the country was hopeful to boost trade with Afghanistan. However, as the Taliban takes over Afghanistan, India may face obstacles in trade via Chabahar port. India’s bilateral trade with Afghanistan is already slowed and that could further decline in the coming years.

India’s trade with Pakistan has already halted due to diplomatic issues including terrorism and border dispute. Look at the chart and table that showcases India’s trade with Afghanistan and Pakistan reported in 2023 and 2024.

India can bypass Pakistan, and reach Europe via Chabahar Port

Chabahar is also a part of the International North-South Transport Corridor (INSTC). This corridor will link the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and to northern Europe via Saint Petersburg. It is anticipated that shipments through the INSTC route will take 15 days less compared to the Suez Canal route.

As a result, the Chabahar Port is also seen as a gateway for unlocking India’s trade potential with European countries, as it provides a shorter route to Europe. Here’s a data visualization of India’s trade with European countries in 2023.

Chinese Checkers

India’s takeover of the Chabahar Port is seen as a strategic step to counter China’s String of Pearls – a network of military and commercial facilities along the Indian Ocean to encircle and trap India. These include China’s facilities in Chittagong (Bangladesh), Karachi and Gwadar (Pakistan), Colombo and Hambantota (Sri Lanka), and Kyaukphyu (Myanmar). Strategic experts have warned that these could be swiftly repurposed into Chinese naval facilities in case of a conflict involving India.

To mitigate the Chinese threat, India has taken some crucial steps including military and strategic deals with several countries like Iran, Japan, Indonesia, the Philippines, South Korea, Singapore, Thailand, and Vietnam. Apart from developing Chabahar port, India is constructing a deep-sea port in Sabang, Indonesia, and will assist Bangladesh in revamping the seaport in Mongla.

India, however, must keep vigilance of Iran’s growing proximity with China, which could throw India’s net assessment off track. For instance, China and Iran recently put into motion a 25-year development plan. According to a report, the opening of the first Chinese consulate in the port city of Bandar Abbas, which handled around 85% of Iran’s seaborne trade in December 2022 was the first step in implementing the pact.

In a nutshell, India’s logistical map:

• Strengthening the International North-South Transport Corridor that also involves Chabahar.
• India-Middle East-Europe Economic Corridor (IMEC) – the agreement was signed during the G20 Summit.
• Developing Sittwe port in Myanmar.
• To the East, resumption of work on the India-Myanmar-Thailand Trilateral Highway. It will provide access to the Pacific region.
• Examining the viability of polar routes with the Chennai-Vladivostok corridor.

The Iranian President’s death could be a setback for India’s 10-year Chabahar port agreement with Tehran

The death of Iranian President Ebrahim Raisi in a helicopter crash may prove a setback for India’s 10-year Chabahar port agreement with Tehran. Meanwhile, the United States of America has warned of putting sanctions on Indian firms that are involved in the Chabahar port project that was signed between India and Iran for 10 years.  

This is the first time India will take over the full-scale management of an overseas port, which will also have a multiplier effect on trade with Iran and Afghanistan. India’s efforts continue to directly tap the potential in Central Asia, bypassing the troublesome neighbor, Pakistan.