Iran drops India from Chabahar rail project, cites funding delay
Context:
- The Iranian government has decided to proceed with the construction on a rail line from Chabahar port to Zahedan, along the border with Afghanistan on its own, citing delays from the Indian side in funding and starting the project.
Development:
- Iranian minister inaugurated the project by himself.
- The entire project would be completed by March 2022.
- Iranian railways will proceed without the Indian investment.
- Use approximately $400 million from the Iranian National Development Fund.
About the Project:
- Part of commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.
- Signed the MoU in 2016 under the Chabhar agreement.
- The MoU was to construct the Chabahar-Zahedan railway as “part of transit and transportation corridor in trilateral agreement between India, Iran and Afghanistan.
- IRCON, Indian company was to provide all services, superstructure work and financing for the project (around $1.6 billion).
Challenges:
- India never began the work, fearing US sanctions.
- However, US provided sanction waiver for the development of Chabahar Project and Railway line but it is difficult to find equipment suppliers and partners as they could be targeted by the U.S.
- China is already finalising a 25 years deal.
Proposed Railway Line:
About Chabahar Port:
Agreement:
- Signed in 2015 between India and Iran.
- India was to develop the Chabahar Port.
Location of Chabahar Port:
- Located in Gulf Of Oman.
- Only Oceanic port of Iran..
Importance for India:
- Enhanced trade with Afghanistan and Central Asia by bypassing the Afghanistan.
- Access to the International North-South Transport Corridor that has sea, rail and road routes between India, Russia, Iran, Europe and Central Asia.
- Counter Chinese Presence in Arabian Sea.
- Significant boost in the import of iron ore, sugar and rice to India.
- Establishment of sustainable connectivity with Afghanistan.
- Point to coordinate humanitarian assistance across the Middle East.
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