The roots of Indo-Iranian relations can be traced back to the ancient civilizations of the Indus Valley and Mesopotamia, revealing shared history, culture, language, music and religion. Recent events could help economic relations flourish. With the recent signing of the Memorandum of Understanding (MoU) to develop the Chabahar Port, India has taken a huge step in augmenting its strategic access to the Middle East and in its “efforts to circumvent arch-rival Pakistan and open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.”

India’s interest in Chabahar can be traced back to 2003, but the venture has moved slowly because of sanctions over Iran’s nuclear program. Despite opposition from the United States, India went ahead with signing a MoU with Iran in May to develop the port through a special purpose vehicle (SPV). In the first phase, $85.21 million was invested to convert the berths into a container terminal and a multi-purpose cargo terminal. It has been reported that approval for incurring an annual revenue expenditure of $22.95 million was given to support operational activities. The strategic location of Chabahar feeds India’s interest in the port, which will help in building up its connectivity to the region. Located in south-eastern Iran along the Gulf of Oman, Chabahar gives India sea and land access to Afghanistan and Central Asia without having to go through Pakistan. Afghanistan’s Zaranj region can be reached through the Iranian road network and be directly linked to Delaram in western Afghanistan. This would establish direct access by road to Afghanistan’s Garland Highway, thereby connecting the port to four major cities – Herat, Kandahar, Kabul, and Mazar-e-Sharif. It can be utilized to enhance trilateral relations between India, Iran, and Afghanistan.

It also solves the issue of India’s needing to depend on Pakistan’s cooperation for trade with Afghanistan. The 2011 Afghanistan Pakistan Transit and Trade Agreement allows Afghanistan access to Pakistani ports and up to the final checkpoint on the Wagah side of Pakistan’s border with India. India cannot trade directly with Afghanistan through this route because of restrictions imposed by Pakistan. Afghan trucks are forced to go back without cargo from the Indian side, which increases transport costs. The development of Chabahar Port will provide an alternate route to Afghanistan, reducing freight time and transport costs.

Growing Indian involvement in the region could open up the possibility of India’s asserting its influence in Afghanistan after the U.S. drawdown. Even though India has much to gain from this project, the process has taken more time than necessary. This untoward delay could be attributed in part to India’s fear of annoying the United States. Washington has warned India not to make hasty decisions about the project and reminded them of the sanctions regime imposed on Iran. However, Prime Minister Narendra Modi has shown pragmatism of late to clinch the deal and build the Chabahar port. Modi’s sense of urgency in concluding the trade pact is a result of efforts to avoid encirclement by its larger neighbor, China. On the other hand, China’s main strategy here is to augment its influence of power.

Gwadar port, with China’s backing, could soon pose a potential threat to the development of Chabahar by outpacing it. Having obtained the management rights for the next 40 years, China has secured its place, which poses strategic implications for India. The port opens up a route for transporting oil from the Middle East along a 3,000 km land route from Gwadar port to the north-western Chinese city of Kashgar. China’s recent $46 billion energy and investment development deal with Pakistan also gives China a stronger presence. Hence, India will be competing with both Pakistan and China.

In order to stand its ground against the competition, India will have to combine the Modi administration’s most important feature – fast-track diplomacy – with the timely execution of projects. India’s timing its Chabahar deal with the withdrawal of sanctions means that even relations with United States should not become strained. We may even see the United States back India in order to counter growing Chinese influence in the region. The involvement of India in Iran could thus open up a whole new game of geo-politics in the region.


Image: Iranian Presidency-Anadolu Agency, Getty 

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