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Mainstream, VOL LVII No 31 New Delhi July 20, 2019

More Needs to be Done to Revitalise the Chabahar Project

Saturday 20 July 2019

by Gautam Sen

The Government of India’s latest regular Budget of 2019-20, has a meagre allocation of Rs 45 crores for the development and opera-tionalising of the Chabahar Port infrastructure under the Ministry of External Affairs line of credit to finance this programme, as compared to Rs 150 crores last year. The issue is, whether this programmatic allocation is adequate, and whether it will be sufficient to promote India’s policy on obtaining land access to Central Asia through Iran and also fulfilling its commitment to Afghanistan on the latter’s infrastructural development and for bilateral trade promotion.

The implication of the Chabahar on India’s policy towards Afghanistan, peace and stability in that country post-US withdrawal and with a new regime there—in all probability a Taliban- oriented or dominated one—has to be kept in view and dealt with in a long-term perspective. While the prima facie need of Chabahar does not seem to be questioned, there are apparent doubts on how this Indian port infrastructure will be executed and juxtaposed to India’s overall political and commercial interests vis-à-vis Central Asia. This backdrop probably explains the reduction in India’s reduced financial commitment on Chabahar for 2019-2020.

The progress of implementation within the scope of India Ports Global Limited’s (IPGL) special purpose vehicle project of Chabahar has been at a relatively slow pace. After India took over the Chabahar Port complex on December 24, 2018 in a joint meeting of Iran, Afghanistan and Indian officials, the port had been activated with a Cyprus registered carrier unloading Brazilian cargo on December 24, 2018. However, full scale operations are yet to start. The port’s overall utility depends on the availability of lateral road and rail linkages northward to Zahidan on the Iran-Afghanistan border, lateral links with the east-west infrastructural network in Iran and also northwards from this network towards Central Asia. Work on the lateral linkages is in progress, but activities on two berths at Chabahar Port (a part of the overall port Shahid Behesti complex), which are within the scope of India’s investment and construction programme, is required to be augmented and accelerated. Utility of the Chabahar facilities is evident from the first major Afghan consignment of 570 tonne of export material being transshipped from Zaranj in the Nimruz province of south-western Afghanistan to India through this port on February 24 this year.

Notwithstanding issues looming on the extent the port facilities can be and likely to be utilised by the regime in power in Afghanistan, or the security situation and development scenario around the Chabahar-Zahidan (northwards nearest rail link in Iran)-Zaranj axis remaining conducive, India’s overall interests dictate that the IPGL project be executed with full vigour and funding in the near future without further time and cost overrun. The importance of Chabahar has to be reckoned in the context of India-Iran relations as well as the economic linkages feasible within the group of countries that are part of the Shanghai Cooperation Council of which India is an important constituent. Though there are some doubts on the economic viability of transshipment through Chabahar to Europe and Central Asia, the utility of this port, with India’s presence in the port management structure in the sensitive south-eastern mineral-rich coastal region of Iran, and its strategic implications vis-à-vis the Persian Gulf, cannot be denied.

In the present context of the escalating US—Iran tension in the Gulf, with the latter crossing the nuclear fuel enrichment cap and the limits of stockpile of fissile material which were imposed under the Joint Comprehensive Plan of Action (Iran Nuclear Deal) of July 14, 2015, it is doubtful if the waiver of US sanctions on India’s investment in Iran’s Chabahar project will continue for long in its present form. It is therefore imperative that India hasten its activities to consummate development of the project and achieve the political objective to be derived from a fully functional Chabahar port. Viewed in this perspective, the latest allocation in the current Budget does not seem to be judicious.

India’s efforts initially were to conceive Chabahar as an alternative to Pakistan’s Gwadar port, approximately 70 km away on the Arabian Sea littoral. India had a strategic need to have an alternative transshipment port bypassing Pakistan, to access Afghanistan. It was pertinent to bilateral commercial needs as well as to signal political support to the Afghan state and its regime. In the presently evolving strategic scenario, wherein China has evinced interest in the development of Chabahar and Iran is proposing complementarity in develop-ment of both Chabahar and Gwadar ports, India has to tread cautiously while retaining its foothold in Chabahar. It is possible that some of the raw materials and value-added products from Iran’s Sistan-Balochistan region in which Chabahar is situated, and also from the free trade zone to be put in place around the port, could be transported out through the Gwadar port. New Delhi may not be apprehensive of such a development. India’s main concern should be to have access to the provinces on the western and north-western periphery of Afghanistan through trade and commerce passing through the Chabahar port and Iran’s laterally connected infrastructure to the central and upper parts of that country and beyond to the peripheral Central Asian countries. Teheran and New Delhi could work on a congruent approach in regard to the above. In such a context, the utility of Chabahar will remain. There is therefore, no need to taper down or go slow on India’s investment commitment and construction activities on the port project.

While India’s efforts to make a success of the Chabahar project executed through a special purpose vehicle of IPGL should continue, there is a need to upgrade the present level of activities. Both the container terminals and the ancillary facilities should be completed within this year. India is committed to a capital investment of US $ 85.21 million on the development of two berths and container terminals, and the incurring of an annual revenue expenditure of US $ 22.95 million over the next few years. This commitment should be fulfilled before the vagaries of the international strategic situation in the region throws up new imponderables or the strategic security scenario deteriorates significantly.


The author is a retired IDAS officer who served in senior appointments with the Government of India and State governments at the level of Special Secretary.

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