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Mint
05-05-2025
- Business
- Mint
How India's IPGL is flexing its port muscles abroad
State-run Indian Ports Global Ltd (IPGL) is leading a consortium to acquire and operate 20 commercial ports across Asia, Africa and India, two people aware of the matter said. The company, which operates Iran's landmark Chabahar terminal, has set its eyes on ports in Bangladesh, Sri Lanka, Africa, West and East Asia, as well as in India. IPGL, along with a group of state-run companies, has submitted its proposal to the Union shipping ministry, which has asked the Centre for Maritime Economy and Connectivity (CMEC) to examine the plan, the people cited above said on the condition of anonymity. Sunil Mukundan, managing director of IPGL, confirmed the development. 'We have proposed the operation of 20 ports across the globe and in India to the ports and shipping ministry. Further action would be made on getting directions on our proposal," he said. IPGL operates the Shahid Beheshti terminal at Chabahar Port, a strategically important gateway for trade with Afghanistan and Central Asia. The port is crucial for India's connectivity ambitions and its participation in the International North-South Transport Corridor (INSTC) that aims to reduce transit times and costs for trade with Eurasia. Also read | We are generating more cash than we know how to use: Adani Ports MD Karan Adani The IPGL consortium has not revealed its targets, but may start with terminal development work at the Mongla port at Khulna, Bangladesh's second largest and busiest port, as well as at Kankesanturai near Sri Lanka's Jaffna, the people cited earlier said. Presence at these locations, also coveted by China, aims to serve India's strategic and commercial interests along the existing trade routes between Asia-Pacific, Europe and Africa. The Indian government may directly negotiate with its foreign counterparts to advance these deals, one of the two people said. India is keen to develop the Eastern Maritime Corridor, which will link its eastern ports to the Russian port in Vladivostok, with strategic acquisitions of ports, terminals, or trans-shipment presence along the route. The IPGL plan may also include infrastructure projects in the strategic South China Sea area up to Vladivostok. Some African countries have offered India the opportunity to operate their terminals, and IPGL may evaluate some of them, the second person quoted above said. A query sent to the shipping ministry remained unanswered till press time. Read this | India to fast-track Chabahar port works in Iran 'Some Indian private groups have already been very active in acquiring international ports/terminals, and this focused initiative by IPGL will further cement India's role in international maritime trade and help create trading routes which are shielded from international geo-political risk," said Kuljit Singh, Partner and Infrastructure Leader, EY India. "India has been on good terms with most countries, and hence, getting approvals for Indian investments in global ports may not be so difficult and, in fact, such port investments can be leveraged to enhance Indian influence beyond its borders. India can also bring in international best practices for its own ports from these international investments," Singh said. IPGL has previously acquired ports in Iran, Myanmar and Sri Lanka, and has ambitions to expand into Africa as well, said Pushpank Kaushik, chief executive officer and head of business development (Subcontinent, Middle East and Southeast Asia) at Jassper Shipping, adding the latest proposal shows a clear effort to increase strategic reach and improve trade connectivity. "With more ports under its control, India's influence on trade routes and supply chain stability is expected to grow. Control over ports along important corridors like the INSTC and IMEC will help logistics to be streamlined, transit times and costs to be reduced, and supply chains to become more resilient," he added. The G20's proposed India-Middle East-Europe Economic Corridor (IMEC) includes a western maritime corridor connecting India to Europe via the Middle East, including Israel. This corridor aims to enhance trade and connectivity by improving infrastructure and reducing transit times between India and Europe. The IMEC has two main components: an Eastern Corridor connecting India to the Gulf countries and a Northern Corridor connecting the Gulf to Europe. Read this | IMEC: Only peace can pave India's trade pathway to the West via Israel Meanwhile, the INSTC is a 7,200-km multi-modal transportation route that connects the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, and then to northern Europe via Russia. Established in 2000 by India, Iran, and Russia, it aims to enhance trade and connectivity among member countries. India has set up Bharat Ports Global Consortium, bringing together three state-run enterprises—IPGL, Sagarmala Development Co. Ltd (SDCL), and Indian Port Rail and Ropeway Corp. Ltd (IPRCL)—for acquiring ports, and undertaking port and terminal work overseas. While IPGL will oversee operations, IPRCL will build the actual infrastructure, and funding will be raised by SDCL. Along with global port ventures, India is also strengthening its domestic port facilities. The government has approved the ₹ 76,220 crore mega port at Vadhavan in Maharashtra, which will not only scale up country's port infrastructure but also create potential employment opportunities of 1.2 million. Another mega port is proposed at Galathea Bay in the Andaman & Nicobar Islands. This ₹ 44,000 crore project will be developed under a public-private partnership model and aims to capture transhipped cargo currently handled outside India. And read | Adani Ports' latest deal raises growth concerns—markets aren't impressed
Mint
25-04-2025
- Business
- Mint
India to fast-track Chabahar port works in Iran
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. Also read | Kashmir simmers but Pakistan's game has no winners 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. Also read | India looks to boost air cargo amid Red Sea trade disruptions '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. Also read | Trade upheavals: Vietnam is in a tight corner. How resilient is India? 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. Also read | Conflict is remaking the Middle East's economic order 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. Also read | India to import Russian coking coal via Iran's Chabahar port 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.
