India and Iran are collaborating to expedite the development of a new railway connection between the Chabahar port and Zahedan city. This initiative aims to utilize the strategically positioned Iranian port as a key entry point to the International North-South Transport Corridor (INSTC), according to sources familiar with the project.
The INSTC project is designed to serve as the primary trade route for Central Asian and Eurasian nations situated on the eastern side of the Caspian Sea, as well as Afghanistan.
With the recent surge in container and bulk cargo movement, the advancement of the new rail link connecting Chabahar port and Zahedan city is being prioritized. Chabahar has emerged as a significant trade route for India, making the rapid progress of the rail connection crucial.
This year, the port is set to handle a substantial amount of cargo, expected to reach up to 80,000 TEUs (Twenty-foot Equivalent Units) and 3 million tonnes of bulk cargo.
The Shahid Beheshti terminal at the port, now operated by IPGL (India Ports Global Ltd) under the ports ministry, has witnessed a remarkable 600% increase in container traffic in FY24, reaching 64,245 TEUs from just 9,126 TEUs in the previous fiscal year.
In the first two months of FY25, the container traffic at Chabahar has already reached 9,973 TEUs. Additionally, the port handled 2.12 million tonnes (mt) of bulk cargo in FY24 and 2.08 mt in FY23.
‘Gateway for INSTC corridor’
“With its strategic location, Chabahar port can serve as a gateway for the INSTC corridor. Focusing on strengthening connectivity between the port and the hinterland is a key priority for INSTC member states like Iran and India. The feasibility of connecting Chabahar to Zahedan and integrating it with Iran’s existing railway network is under consideration,” stated one of the officials.
Despite the signing of an MoU in 2016 between Indian Railways’ IRCON and Iranian Railways’ Construction and Development of Transportation Infrastructures Company (CDTIC) for the 700-km Chabahar-Zahedan railway line, progress on the project has been slow.
Shipping secretary T K Ramachandran highlighted the commitment of India to mechanize and operate the terminals at Chabahar port as per the long-term contract signed with Iran earlier this year.
The second official emphasized the advantageous geographical positioning of Chabahar port near the Strait of Hormuz, offering operational benefits to countries in Central Asia and Eurasia. Efforts are underway to enhance rail connectivity to the port, positioning it as the preferred trade route for traders in the region.
There are considerations for India’s involvement in the construction of the railway line to establish comprehensive transportation links for Chabahar port encompassing both road and rail infrastructure.
Queries directed at various ministries and the Iranian embassy in New Delhi regarding the project remained unanswered at press time.
In May, India and Iran inked a long-term contract for the development of Chabahar port, marking a significant milestone after prolonged negotiations. IPGL has assumed operations at the Shahid Beheshti terminals, comprising a container terminal and a multi-cargo berth.
The port’s operational capacity has already attracted bulk and container cargoes, with IPGL offering concessions to promote the port’s usage, including discounts and extended storage times.
Boasting a deep draft capable of accommodating larger vessels, Chabahar port eliminates traffic congestion typical in the Strait of Hormuz. The seamless road connection to Zahedan and Zaranj in Afghanistan enhances the port’s effectiveness in facilitating the movement of humanitarian aid from India to Afghanistan.
Chabahar port handles a diverse range of products, including automobile spare parts, agricultural goods, and minerals. Plans are in place to broaden the scope of products handled at the port.
Situated in Iran’s Sistan-Baluchistan province on the southwestern coast, Chabahar port serves as a crucial gateway on the Arabian Sea with convenient access from India’s west coast, notably from Kandla port in Gujarat. The port’s prime location and efficient operations have positioned it as a pivotal hub for trade in the region.
The seamless integration of the port with a special free zone enhances its attractiveness, complemented by India’s incentives aimed at boosting trade flows through Chabahar and fostering economic cooperation.
With its pivotal role in the INSTC corridor’s eastern route, Chabahar port plays a crucial part in facilitating trade between India and Central Asian countries, aligning with the collaborative infrastructure development efforts between India and Iran spanning the expansive INSTC network.
The genesis of India’s involvement in developing Chabahar port dates back to 2003, with a commitment to bolstering the port’s infrastructure to strengthen trade ties with Afghanistan and Central Asia. Despite initial delays, subsequent investments and agreements have propelled the port towards becoming a vital trade link in the region.
The recent bilateral agreement signifies a significant step towards enhancing regional connectivity and streamlining trade flows between India, Iran, and Afghanistan. The operational successes at Chabahar port underscore its growing significance as a key trade facilitator in the region.
Despite initial challenges, negotiations on the long-term contract have overcome hurdles, paving the way for a more robust operational framework for Chabahar port under international arbitration guidelines.
Against the backdrop of geopolitical tensions in West Asia, the recent developments underscore the critical importance of maintaining stable trade and diplomatic relations in the region.
India’s strategic investments in Chabahar port highlight its commitment to strengthening its presence along key trade routes and enhancing regional connectivity, further solidifying its position in the global trade network.
As India’s economic interests expand across strategic regions like the Persian Gulf, investments in infrastructure projects like Chabahar port underscore its growing role as a key player in shaping trade dynamics in the region.
Chabahar port’s strategic positioning vis-a-vis Gwadar port and India’s continued investments in the region highlight its strategic importance in bolstering India’s trade network and countering regional challenges.
