Chabahar Port deal between India and Iran to be solidified by September 2023

Come September and India and Iran will finalize the significant long-term deal for the development of Iran’s Chabahar Port. The agreement is expected to be signed before the Global Maritime India Summit 2023, scheduled in New Delhi in October. After many years of negotiations, India will be able to work on developing the Shahid Beheshti Terminal at the Chabahar Port in Iran.

Chabahar is located near the Iran-Pakistan border and is a little over 60 miles from the Pakistani port of Gwadar which the Chinese are developing. The proposed transit route through Iran and Afghanistan also appears to be a response to the USD 45 billion China-Pakistan Economic Corridor (CPEC) announced last year. India Ports Global Ltd. (IPGL) – a joint venture of the JNPT and the Kandla Port Trust – signed a pact with Aria Banader Iranian in 2016 to invest USD 85 million in developing two container berths with a length of 640 meters and three multi-cargo berths.

The negotiations have been ongoing for years, and India has been pushing for a longer-term pact to ensure certainty for investment and development plans for the port, which was primarily designed by India. The long-term contract, expected to last for 10 years with provisions for automatic renewal, aims to address India’s concerns regarding investment and development.

The pact has been delayed due to a disagreement over the arbitration clause in the deal – Iran was initially uncomfortable with clauses that involved international arbitration due to constitutional restrictions on taking disputes to foreign courts. However, it has been reported that both sides are close to reaching a compromise solution that will allow cases to be taken to international arbitration courts in neutral locations like Singapore and Dubai.

Chabahar Port, located in southeastern Iran, holds immense strategic importance and this project was initiated in 2003 when both India and Iran agreed to its development during then-President Mohammad Khatami’s visit to India. The long-term development of Chabahar Port is a vital component of India’s broader efforts to enhance connectivity and economic relations with Central Asia.

Coupled with the ongoing construction of the Chabahar-Zahedan railway line by India, the port project is expected to create significant trade opportunities for all the countries in the region.

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