India, Iran to boost economic viability – india news

India and Iran have agreed to boost the economic viability of the strategic Chabahar port through various measures, including larger subsidies to merchant shipping firms using the facility, people familiar with the development said on Thursday.

The understanding was reached when external affairs minister S Jaishankar visited Tehran on December 22, 23 to co-chair the Joint Commission meeting with his Iranian counterpart Javad Zarif.

Jaishankar also met President Hassan Rouhani and roads and urban development minister Mohammad Eslami, and the development of Chabahar port figured in all these meetings, the people cited above said.

The decision to boost the economic viability of the port on the Gulf of Oman in southeastern Iran comes in the wake of a belief in New Delhi and Tehran that the two sides had achieved the political objectives behind developing Chabahar, the people said.

India sees the port as key to bypassing Pakistan to access markets in Afghanistan and Central Asia. It is also an essential part of plans to boost Afghanistan’s exports and to supply aid to the war-torn country without depending on routes passing through Pakistan.

“There is a feeling that Chabahar is still not as economically viable as other ports in the region, such as Bandar Abbas or Karachi. So, steps have to be taken to bolster Chabahar’s ability to attract more vessels,” said one of the people familiar with the matter who asked not to be named.

India currently provides a subsidy of almost 40% to merchant shipping using Chabahar port and Iran too gives some subsidies. Both sides now plan to increase subsidies to attract more shipping, the people said.

Steps will also be taken to boost Afghanistan’s exports via Chabahar, the people said. Since India took over operations at Shahid Beheshti terminal in Chabahar in December 2018, the port has handled more than 500,000 tonnes of cargo, including some 1,000 tonnes of exports from Afghanistan.

India is also committed to the speedy construction of a key railway line linking Chabahar port to Zahedan on the border with Afghanistan to facilitate Afghan exports, the people said.

Iranian President Rouhani specifically raised the Chabahar-Zahedan rail link at his meeting with Jaishankar in Tehran on Monday and asked India to accelerate work on it to “benefit regional trade relations”.

New Delhi has been developing a transit-transport corridor based around Chabahar in Sistan-Baluchistan province after India, Afghanistan and Iran signed a trilateral agreement in May 2016. The project has been affected by US sanctions imposed on Iran, though Washington has supported the development of Chabahar by granting a waiver for the port.

During Jaishankar’s meetings with the Iranian leadership, the issue of strengthening banking ties to speed up implementation of joint projects also came up, the people said.

Two days before Jaishankar’s visit to Tehran, officials of India, Afghanistan and Iran met in New Delhi on December 20 and agreed to finalise a protocol to streamline transit, roads, customs and consular matters at Chabahar port.

The second meeting of the committee formed by the three sides to oversee the Chabahar pact also agreed to include Mormugoa and New Mangalore ports, in addition to Jawaharlal Nehru Port, Mundra, Kandla and Cochin, in the designated route under the agreement.

The three sides agreed the Federation of Freight Forwarders’ Associations in India will conduct a study to streamline cargo transit through Chabahar, and to organise promotional events in Afghanistan and India to popularise the port.