Iran-India ties poised for takeoff
Almost a decade after Iran, India and Afghanistan agreed to develop a transit route connecting Afghanistan to Iran’s newly developing Chabahar port, the project is finally set to take off.
The Afghans recently announced that the draft of the memorandum of understanding for road transit of commodities had been finalized and ready to be endorsed by all countries, perhaps as early as next month.
This development provides fresh impetus to Iran and India's bilateral relationship, which had lost considerable steam since 2005. Among other factors, economic constraints resulted from the sanctions imposed on Iran and India’s own policy realignment after its rapprochement with the United States.
Iran has long promoted guaranteed land and sea access to Afghanistan, Central Asia and beyond to the Indians, who are very keen on an alternate trade route to the region, since transit through Pakistan has not been an option. Yet, another strategic piece is the International North-South Trade Corridor promoted by India, Iran, Oman and Russia to connect freight from the Indian Ocean to Europe and Russia via Iran, Central Asia and the Caucasus.
India thus finds great economic and strategic value in the port of Chabahar. Located on the Makran coast in the southeastern province of Sistan and Baluchistan, it is not only Iran’s first deep-water port but also its only port directly facing the Indian Ocean. Chabahar is located just 72 kilometers (44 miles) west of Pakistan’s deep-water port of Gwadar, built with Chinese assistance.
The Iranians, with Indian support, have already connected the port by road to the Afghan border town of Zaranj and the Afghans, keen to wean off their dependence on Pakistan, have welcomed the opportunity to boost trade with India via Iran through the creation of a direct sea link from Chabahar.
For India, the road to this transit agreement has been long and expensive. After 10 years of sluggish progress marred by delays on both the Iranian and Indian sides, much-needed momentum was injected into the tripartite discussions on the sidelines of the Non-Aligned Movement summit in Tehran in August 2012, when all three countries agreed to set up a joint working group to speed up the process.
So far, New Delhi has committed about $100 million to upgrade the facilities in Chabahar. It spent another $135 million to construct a 200-kilometer road from Delaram in western Afghanistan to the border town of Zaranj, operational since 2009. There are also plans to build a parallel 900-kilometer railway from the iron-rich Hajigak region of Afghanistan’s central Bamiyan province to Chabahar port, though the mining project is currently stalled.
Earlier this year, Indian officials also expressed their willingness to establish a direct shipping lane from Chabahar to Indian ports to bypass Dubai and cut transit costs for all countries involved. At a meeting with Iranian Minister of Road and Urban Development Abbas Akhoundi, Indian Ambassador to Iran D. P. Srivastava estimated an initial investment of $147 million would be needed for the construction of a container terminal to facilitate the project.
With an official road-transit agreement now approaching the finish line, India’s gamble on Iran looks less likely to fail than it did in the past. However, considering the upcoming elections in India, it will be up to the next government in New Delhi to keep up this renewed momentum. In less than a month, India will have a new leader. If polls are any indication, the country’s next government may be led by the main opposition party, the Hindu nationalist Bharatiya Janata Party (BJP) — an old friend to Iran.
Ultimately, regardless of who becomes India’s next leader, there is a growing call from the Indian strategic community urging the next government to prioritize its engagement with Iran and tap into opportunities to reactivate strategic and economic links. Such policies would be welcomed by Iran.
Although the interim nuclear deal between Iran and the UN Security Council does not provide immediate relief on energy concerns, India is keeping a close watch on events and remains optimistic that its relations with Iran will gain further traction in the medium term. A trilateral transit agreement after a decade’s wait may well signal that much-needed reset.