Chabahar port

Context: A meeting between India’s Foreign Secretary and Taliban ruled Afghanistan’s Foreign Minister discussed the resolution of security concerns in trade via Chabahar port of Iran.

About Chabahar Port

• Chabahar port is located on the Makran coast of Sistan and Baluchistan Province of Iran, at the Gulf of Oman's mouth. It is situated to the west of Iran's border with Pakistan.
• It is Iran's first deepwater port and the only Iranian port with direct access to the Indian Ocean.
• In May 2024, India signed a landmark 10-year agreement to operate the Chabahar Port in Iran. Under the agreement, India is to invest $120 million in the development of infrastructure in the Shahid Beheshti terminal at the port and extend a $250 million credit line to Iran.

Significance of Chabhar Port

• Strategic location of the Port:
  • Sits at the mouth of Strait of Hormuz Area
  • Connects three regions: Central Asia, South Asia and West Asia.
  • Junction of shipping, oil trade routes
    • Estimated 17 billion barrels of crude oil passes this way daily. 
• For Iran: Iran envisions Chabahar as a gateway to Central Asia, establishing a free trade zone and robust road and rail links between Chabahar and Central Asia. For Iran, it presents a potential shield against the impact of Western sanctions.
• For India: Regional Connectivity: 
  • Alternative trade route:
    • It provides India with an alternative trade route, circumventing Pakistan's restrictions on land access for trade with Afghanistan and Central Asia.
    • The route can help connect India with energy-rich Azerbaijan, Turkmenistan and other Central-Asian nations. 
    • This route is 40% shorter, 30% less expensive than the trade via Red Sea-Suez Canal-Mediterranean Sea route. 
  • Chabahar port also provides direct access to India's Farkhor Air Base in Tajikistan, contributing to enhanced regional connectivity.
• Component of INSTC: Chabahar is also a pivotal component of the proposed International North-South Transport Corridor (INSTC), a comprehensive transportation initiative connecting the Indian Ocean and Persian Gulf to the Caspian Sea through Iran. 

Security Concerns to Trade via Chabahar Port

• Security Risk: Chabahar port is surrounded by the various conflicting regions which are under influence of terror groups like Taliban, ISIS, and Tehrik-e Taliban (of Pakistan’s Khyber Pakhtun region) leading to threats of terror attacks.
• Narcotic crimes: Chabahar is at the Golden Crescent, drug trafficking and narcotic crime led violence leads to threats to trade.
• Afghan-Pakistan nexus: Close ties of Pakistan’s ISI and Taliban makes Indian participation skeptical.
• Geopolitical rivalries: Growing Chinese influence in Afghanistan creates a geopolitical environment unfavourable to India, diminishing its strategic influence in the region.
• Radicalisation and ideological spillover: Taliban’s unclear policies on counter-terrorism could inspire radicalisation in the wider region, especially among vulnerable groups that can destabilise trade via Chabhar. 

Challenges in developing/utilising Chabhar Port

• Strained US-Iran relationship, exacerbated by Iran's inclusion in the ‘axis of evil’ alongside Iraq and North Korea, compelled India to exercise caution in its dealings with Iran.
  • India's investment in the Chabahar–Zahedan railway was affected by US sanctions. 
  • Despite handling 2.1 million tons of cargo in 2015, sanctions impacted the port's expansion, leading to only 10% utilisation of its 8.5-million-ton capacity in 2019.
• Obstacles to trade via Chabhahar: 
  • Logistical obstacles to trade, such as Iran’s delay in completing two railway lines – Chabahar-Zahedan and Rasht-Astara — which are necessary for moving cargo from the port and connecting to a planned International North–South Transport Corridor (INSTC).
  • Iran’s lack of access to the SWIFT system of electronic international payments. Iran is also barred from conducting transactions in dollars.