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India, Iran Sign Deal for Chabahar Port, Boosting Connectivity

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India and Iran have signed a significant 10-year contract for the operation of a terminal at the strategically important Chabahar port in Iran. This move is expected to enhance regional connectivity and strengthen trade ties among India, Iran, and Afghanistan, while also opening up new avenues for trade in Central Asia, bypassing Pakistan, NDTV reported.

The contract, signed by India Ports Global Ltd (IPGL) and Iran's Port & Maritime Organisation (PMO), was formalised in the presence of Ports, Shipping, and Waterways Minister Sarbananda Sonowal.

"This long-term bilateral contract on Chabahar Port Operation marks a milestone as India takes over the management of an overseas port for the first time," stated an official statement. "It aims to enhance regional connectivity and facilitate trade, particularly between India, Iran, and Afghanistan."

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The India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, played a crucial role in facilitating the first consignment of exports from Afghanistan to India in 2019. Operations have continued through short-term contracts, with negotiations for the long-term agreement gaining momentum after Mr. Sonowal's visit to Chabahar in August 2022.

"This 10-year long-term lease agreement further strengthens the bilateral ties between the two countries, bolstering confidence and boosting the trust of trading communities from the region," the statement added.

Under the agreement, India will procure various equipment for Chabahar Port, paving the way for enhanced trade and investment opportunities that could potentially boost India's economic development.

Speaking at the occasion, Sonowal emphasised the significance of the contract, stating, "With the signature of this contract, we have laid the foundations of India's long-term involvement at Chabahar." He highlighted that the contract will have a multiplier effect on the viability and visibility of Chabahar port.

Chabahar Port, located in Iran's Sistan-Balochistan province on the southern coast, is being developed by India and Iran to boost connectivity and trade ties. India sees it as a key hub for the International North-South Transport Corridor (INSTC) project, a multi-mode transport project aimed at moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia, and Europe.

The development of Chabahar Port has been a long-standing project, with discussions dating back to 2003 during Iranian President Muhammad Khatami's visit to India. In 2013, India committed to investing USD 100 million towards its development.

Chabahar's oceanic port offers India a strategic advantage by bypassing Pakistan and establishing direct access to Afghanistan and beyond, into Central Asia. Since 2019, it has handled container traffic of more than 80,000 TEUs and bulk and general cargo of more than 8 million tonnes.

The Ministry of External Affairs (MEA) has allocated ₹ 100 crore for Chabahar Port for 2024-25, underscoring India's focus on connectivity projects with Iran.

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