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India-Iran Sign Chahbahar Agreement
May 09, 2015

Notwithstanding US objections, India and Iran signed an agreement for the development of the strategically important Chabahar port which will give India sea-land access route to Afghanistan bypassing Pakistan. The pact was signed after comprehensive talks between visiting Road Transport and Highways minister Nitin Gadkari with the Iranian leadership in Tehran.

  • Chabahar port is located in Sistan-Balochistan Province on Iran’s southeastern coast and is of great strategic utility for India which will get sea-land access route to Afghanistan bypassing Pakistan.

  • The port will be used to ship crude oil and urea, saving India transportation costs.

  • India intends to lease two berths at Chabahar.

  • The port will be developed through a Special Purpose Vehicle (SPV) which will invest $85.21 million to convert the berths into a container terminal and a multi-purpose cargo terminal.

  • Indian and Iranian commercial entities would now be in a position to commence negotiations towards finalisation of a commercial contract.

  • Indian firms will lease two existing berths at the Port for 10 years and operationalise them as container and multi-purpose cargo terminals.

  • The availability of a functional container and multi-purpose cargo terminal at Chabahar Port would provide Afghanistan’s Garland Road Network System alternate access to a sea port, significantly enhancing Afghanistan’s overall connectivity to regional and global markets.

  • Last year in October, India had approved the framework of an inter-governmental memorandum of understanding (MoU) for setting up an $85.21 million joint venture firm for equipping two fully-constructed berths at Chahbahar port.

  • As per the framework approved, an Indian joint venture company would lease two fully constructed berths in Chahbahar port’s Phase-I project for a period of ten years, which could be renewed by mutual agreement.

  • The Indian side will transfer ownership of the equipment to be provided through the investment to Iran’s port and Maritime Organisation (P&MO) without any payment at the end of the tenth year.


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