According to persons familiar with the subject, India and Iran are close to reaching a long-term agreement for operations at the vital Chabahar port, with just differences on an arbitration clause holding the matter up. The long-term arrangement, which is valid for ten years and will be automatically renewed, is intended to replace an earlier agreement that covered India’s activities at the Shahid Beheshti terminal in Chabahar port and was renewed on an annual basis.

The decision comes at a time when China is showing increasing interest in investing in ports and other coastal infrastructure in Iran, and the Iranian side has been pressuring New Delhi to speed up construction of the Shahid Beheshti terminal, which is controlled by the state-owned India Ports Global Limited (IPGL). The long-term deal was discussed during Sarbananda Sonowal’s visit to Iran last month, particularly during his meeting with Iran’s urban development minister, Rostam Ghasemi.


Holding Issue

According to the people, the issue holding up the long-term agreement is minor and refers only to jurisdiction for arbitration of conflicts on any matter. Such arbitration cannot be sent to foreign courts under Iran’s Constitution, and a suggestion under the accord would necessitate a constitutional amendment, which would be difficult, they said. According to the persons, all parties are optimistic about a quick resolution of this situation because legal and technological experts are working on it.

Simultaneously, the Iranian side has pressed India to expedite the expansion of its operations at Chabahar port, including the construction of the 700-kilometer Chabahar-Zahedan railway connection. Less than 200 kilometers of this critical rail link remain to be completed, and in response to the Indian side’s reluctance to work with a construction company linked to the US-sanctioned Islamic Revolutionary Guard Corps, Tehran has suggested that a contract be finalized with another body, according to the people.

IPGL History

Since its inception at the Shahid Beheshti terminal in late 2018, IPGL has handled more than 4.8 million tonnes of bulk cargo, including transshipments from Australia, Bangladesh, Brazil, Germany, Russia, and the UAE, and experts believe that figure could be significantly increased if the port is linked to the rail network. In May 2016, India began work on the Shahid Beheshti terminal as part of a tripartite agreement on Chahbahar signed with Iran and Afghanistan. Since the Taliban took over the country last year, Afghanistan has virtually been removed from the arrangements, albeit the port has benefited from a US waiver on sanctions placed on Iran.

India has agreed to invest $85 million at the facility and has already sent cranes and other equipment worth $24 million. People stated that more equipment, such as huge gantry cranes for transporting cargo from ships to land, should be supplied more quickly. During Sonowal’s visit, the two countries agreed to form a joint technical committee to ensure the port’s seamless operation. Sonowal stated at the time that India is “totally committed to developing the Chabahar port to realize the vision” outlined during Prime Minister Narendra Modi’s visit to Iran in 2016.

According to the sources, India plans to hold a meeting of a joint working group on Chabahar with Central Asian states in October to promote the usage of the port. The port is also being integrated into the International North-South Transport Corridor (INSTC).

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