India defies US to invest in Iranian port of Chabahar

India will invest in the Iranian port of Chabahar, despite US political pressure to stick to sanctions against Iran.

In October 2014, the Indian government decided that the state-run Jawaharlal Nehru Port Trust and Kandla Port Trust would form a joint venture to invest US$85m in upgrading Chabahar’s two berths.

The government also said that the venture may look for an Iranian partner and a private-sector Indian partner.

On May 6, India’s ministry of external affairs confirmed this, by announcing that Indian shipping minister Nitin Gadkari and Iranian Transport Minister Abbas Ahmad Akhoundi had signed a memorandum of understanding (MOU) facilitating this investment.

“With the signing of this MOU, Indian and Iranian commercial entities would now be in a position to commence negotiations towards finalization of a commercial contract under which Indian firms will lease two existing berths at the Port and operationalize them as container and multi-purpose cargo terminals,” an Indian Ministry of External Affairs statement said.

According to commentators, India sees Chabahar as a useful route to and from Central Asia and Afghanistan, without passing through its rivals Pakistan or the disputed territory of Kashmir. Iran has offered India preferential tariffs for exports passing through to Afghanistan.

For the last eleven years, Iran and India’s desire to develop this route has been thwarted by US-led sanctions on Iran but, as a deal on Iran’s nuclear programme seems close, these sanctions look increasingly likely to be relaxed or stopped.

Behzad Alsafi, a spokesperson for Iran’s biggest port of Bandar Abbas, told CM that he was hopeful that the sanctions will be removed soon.

Nevertheless, the US has warned against investing in Iran until the nuclear deal is finalised, which is expected to be in June 2015, and sanctions are gradually ended.

There has also been speculation that India is competing with another geopolitical rival, China, for influence over Central Asia and its fossil fuels. China has funded the port of Gwadar in Pakistan, which is only 170km east of Chabahar.

On April 26, Iranian media reported that Oman and Iran have formed a shipping line together to operate two container ships and a bulk carrier, making trips every 15 days, between the Iranian port of Shahid Rajaee and the Omani port of Sohar.