India to fast-track Chabahar port works in Iran

Mint

25-04-2025

New Delhi:
India plans to fast-track work on expanding the Chabahar port and providing rail links from the strategic port to Iran's border with Central Asia, a senior official said, a move aimed at countering Pakistan's China-backed Gwadar port.
Chabahar provides India with an alternative access point to Central Asia and Afghanistan, bypassing both Pakistan and the China-Pakistan Economic Corridor (CPEC). This offers India greater regional connectivity and trade options, reducing its reliance on Pakistan and potentially strengthening its geopolitical influence in the region.
'We have been told by Iranian authorities that a key railway line connecting Chabahar port with Iranian railway network would be ready in a year's time. We are also on course to expanding port capacity five times to 5 lakh TEUs (twenty-foot equivalent unit) while expecting to carry 5 million tonnes of bulk cargo this year," said Sunil Mukundan, Managing Director of India Ports Global Ltd (IPGL), the Indian state-owned entity which operates Shahid Beheshti terminal at Chabahar Port in Iran.
A TEU is a measure of volume in units of twenty-foot-long containers. One 20-foot container equals one TEU.
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As per the plan, India along with Iran would fast-track development of a new rail connectivity route between the Chabahar port and Zahedan city to leverage the strategically located Iranian port as the gateway to the International North–South Transport Corridor (INSTC), providing the main trade channel for Central Asian and Eurasian Countries located on the eastern side of the Caspian Sea and Afghanistan.
The rush for railway connectivity is the result of port operations having become viable with a pick-up in movement of both container and dry bulk cargo and Chabahar becoming a major trading channel for India.
It also coincides with the expected visit of Iranian foreign minister Abbas Araqchi to India in May. According to the Economic Times newspaper, Chabahar will figure in discussions.
The port, as per reports, handled a substantial volume of cargo in FY25, reaching up to 80,000 TEUs and 3 million tonnes (mt) in bulk cargo. In comparison, it had managed just over 64,000 TEUs in FY24 and only around 9,000 TEUs the year before that. In terms of cargo, the port handled 2.12 million tonnes of bulk cargo in FY24 and 2.08 mt in FY23.
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'With its strategic geographical location, Chabahar port can be positioned as a gateway for INSTC corridor. The port is presently connected to the hinterland through road network. Feasibility of connecting Chabahar to Zahedan and further to the existing railway network of Iran has been examined by Iran, in consultation with other stakeholders. With the likely increase in traffic, seamless road and rail connectivity from Chabahar port to facilitate transportation of cargo will become very important. Focus of the INSTC member-states, including Iran and India, is therefore on strengthening the connectivity of the Port with the hinterland," said an official of the ministry of ports, shipping and waterways.
Work on the 700-km long Chabahar-Zahedan railway line has moved very slowly even though an MoU was signed between Indian Railways' IRCON and Iranian Railways' Construction and Development of Transportation Infrastructures Company (CDTIC) back in 2016.
Now, the focus is on implementation as Chabahar is emerging as the next big commercial port in Iran after its biggest, the Shahid Rajaee Port, also known as Bandar Abbas.
Located just outside the strait of Hormuz, the Chabahar port offers financial and operational benefits to the Central Asian and Eurasian Countries located on the eastern side of the Caspian sea and Afghanistan and so the efforts for improving rail connectivity of Chabahar port towards eastern side are on to make the port the preferred link among traders.
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India and Iran in May last year signed a long-term contract for the development of Chabahar port after years of protracted negotiations. IPGL has taken over operations of Shahid Beheshti terminals at Chabahar. The facility comprises container terminal and a multi cargo berth. The facility is operational and is already providing services for EXIM bulk and container cargo, both for gateway and transshipment, and a number of concessions are being offered by IPGL to promote use of Chabahar port including discounts, longer free storage times for cargo
etc
.
The port has a deep draft that can handle larger vessels and vessels calling at Chabahar avoid traffic congestion and waiting time at anchorage, being outside the Strait of Hormuz. The road connectivity to Zahedan (Iran) and onwards to Zaranj (Afghanistan) provides seamless connectivity for movement of humanitarian aid from India to Afghanistan through Chabahar port.
The Port handles a diverse range of products such as automobile spare parts, agricultural products, iron ore, clinkers etc. and efforts are on to increase the product basket handling at the port.
Located in the Sistan-Baluchistan province on Iran's south western coast, the Chabahar port is an important point on
Arabian
Sea with easy access from India's west coast. Kandla port in Gujarat is the closest to the Chabahar port at 550 Nautical Miles while the distance between Chabahar and Mumbai is 786 Nautical Miles. Since 2019, it has handled container traffic of more than 80,000 TEUs and Bulk and General Cargo of more than 8 million tonne.
The port's integration with a special free zone augments its appeal, while India's incentives, such as concessions on vessel-related charges and cargo charges, bolster trade flows through Chabahar, fostering economic growth and cooperation.
Chabahar is envisaged as a crucial link in the eastern route of the International North-South Transport Corridor (INSTC), facilitating the movement of goods between India and Central Asian Countries. This collaboration between India and Iran on developing infrastructure and logistics along the 7,200 kms INSTC aims to reduce transportation costs and time, thereby promoting trade between these regions.
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In 2003, India agreed to help Iran develop the port as well as accompanying infrastructure links during Iranian President Khatami's visit to India. New Delhi's interest in Chabahar came from the port's value as a gateway for Indian goods to reach markets in Afghanistan and Central Asia.
However, matters progressed slowly thereafter. In 2013, India
committed
to providing $ 100 million for the development of Chabahar. A Memorandum of Understanding (MoU) for development of Chabahar Port by India was signed in May 2015. Thereafter, the contract was executed on 23rd May, 2016 at Tehran (Iran) during the visit of Prime Minister of India to Iran for the development of an international trade corridor, which included Chabahar as a central transit point. India agreed to invest $ 85 million in the development of Chabahar's Shahid Behesti terminal. However, the reimposition of sanctions on Iran for its nuclear program hampered India's ability to develop the port.
This present agreement aims to enhance regional connectivity and facilitate trade, particularly between India, Iran and Afghanistan. The India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, facilitated the first consignment of exports from Afghanistan to India in 2019. The operations continued through short terms contracts while negotiations on the Long Term Agreement peaked pace with the visit of Sonowal to Chabahar in August, 2022.
Negotiations on the long-term contract were held up over disagreements on arbitration clauses. Mint had earlier reported that the two sides have reached an accommodation which will allow arbitration under rules framed by the UN Commission on International Trade Law (UNCITRAL).
Investment in Iranian port facility is first by India in such infrastructure overseas. The capacity of the port for cargo handling is currently 8mt and India proposes to expand it to 18 mt in next phase of its expansion and additional investment to the tune of
₹
4,000 crore.
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India is looking to strengthen its presence in key infrastructure along the route passing through the Persian Guld region. India's Adani Group is already operating Haifa post in Israel and more port deals are expected in the region by Indian entities that will strengthen country's presence on this strategic route that is the main gateway for shipments moving from the Indian subcontinent to Europe.
India has major investment plans in the country, largely centered around the Chabahar port as it gives India a strategic advantage over both China and Pakistan. Chabahar Port is at a distance of about 170 kilometers from Pakistan's Gwadar port.