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India And Iran Sign Deal To Develop Chabahar Port |
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India reached a deal on Wednesday to develop a strategic port in southeast Iran despite US pressure not to rush into any such trade agreements before world powers clinch a final nuclear accord with Tehran.
Road Transport and Highways Minister Nitin Gadkari and Iran's Minister for Transport and Urban Development Abbas Ahmad Akhoundi signed a memorandum of understanding to develop the Chabahar Port on the Gulf of Oman, near Iran's border with Pakistan.
The port is in Sistan-Balochistan Province on Iran's southeastern coast and is of great strategic utility for India which will get sea-land access route to Afghanistan bypassing Pakistan.
Iranian President Hassan Rouhani, in his meeting with Gadkari, said, "Resumption of Iran-India cooperation in the southeastern Iranian port city of Chabahar would lead to a new chapter in relations of two countries."
India and Iran agreed in 2003 to develop the port, but the venture has made little progress because of Western sanctions tied to Tehran's disputed atomic programme.
Now, spurred on by Chinese President Xi Jinping's signing of energy and infrastructure agreements with neighbouring Pakistan worth $46 billion, Indian Prime Minister Narendra Modi wants swiftly to sign trade deals with Iran and other Gulf countries.
Encouraged by a provisional, April 2 deal over Tehran's nuclear programme, India recently sent a delegation to Iran to scout for trade, energy and infrastructure deals.
However, the United States has expressed concern that India is moving too fast and could undermine a sanctions regime imposed on Iran to try to bring it to the negotiating table.
Washington has said there is no guarantee that a final deal will be secured with Tehran by a June 30 deadline.
"Sanctions won't solve the problem, but they certainly will continue to bring Iran to a final agreement," Richard Verma, the US ambassador to India, said on Wednesday.
For India, one advantage of a container and cargo terminal at Chabahar is that it would provide landlocked Afghanistan with access to the sea, reducing its reliance on Pakistan.
The port will be used to ship crude oil and urea, saving India transportation costs.
Iran has also proposed a free-trade agreement with India, a trade ministry source said. Rupee-denominated trade with Iran, started in 2012 because of complications arising from sanctions, has almost doubled Indian exports to Tehran in the past two years to $4 billion.
Now, Indian exporters want to build on that, using a free-trade zone being developed near Chabahar to export more to the Commonwealth of Independent States, made up of former Soviet Republics, said Mumbai-based Khalid Khan, regional head of the Federation of Indian Export Organisations.
Leasing Two Berths
India intends to lease two berths at Chabahar for 10 years. The port will be developed through a special purpose vehicle (SPV) which will invest $85.21 million to convert the berths into a container terminal and a multi-purpose cargo terminal.
"With the signing of this MoU, Indian and Iranian commercial entities would now be in a position to commence negotiations towards finalisation of a commercial contract under which Indian firms will lease two existing berths at the Port and operationalise them as container and multi-purpose cargo terminals," India's Ministry of External Affairs said.
"The availability of a functional container and multi-purpose cargo terminal at Chabahar Port would provide Afghanistan's garland road network system alternate access to a sea port, significantly enhancing Afghanistan's overall connectivity to regional and global markets, and providing a fillip to the ongoing reconstruction and humanitarian efforts in the country," it said.
Pointing to Iran's transit position for connecting east to west and north to south, the Iranian president stressed that his country could play a pivotal role in connecting India to Central Asia, the Caucasus and Eastern Europe via railway.
Noting the importance of North-South Transport Corridor and development of Iranian ports, Rouhani stressed that Iran fully welcomes the Indian investors to make investment in construction of roads, railways and development of Chabahar port and other southern ports in Iran.
Last year in October, India had approved the framework of an inter-governmental Memorandum of Understanding (MoU) for setting up an $85.21 million joint venture firm for equipping two fully-constructed berths at Chahbahar port.
As per the framework, approved in the Cabinet last year, an Indian joint venture company would lease two fully constructed berths in Chahbahar port's Phase-I project for a period of ten years, which could be renewed by "mutual agreement".
The Indian side will transfer ownership of the equipment to be provided through the investment to Iran's port and Maritime Organisation (P&MO) without any payment at the end of the tenth year.
Source : businessworld.in
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