India is denying media reports that it has been left out of Iran’s Chabahar railway line project following China’s cheap proposal. Delhi cast the reports as speculative and stated that Tehran is yet to nominate an authorized entity to settle the outstanding technical and financial issues related to the venture. Iran has reportedly cited delays from India in funding and starting the project for its decision.

The 2016 India-Iran Agreement

India and Iran had signed an agreement to construct the rail line in May 2016. The railway project was a venture between the state-owned Indian Railways Construction Limited and the Iranian railways. It was a part of the trilateral agreement between India, Iran, and Afghanistan to build an alternate trade route to Afghanistan and Central Asia. Located 72 kilometers west of Pakistan’s Gwadar port, the route holds economic and strategic significance for India. The Chabahar-Zahedan rail line will ultimately extend to Zaranj in Afghanistan, enabling a convenient and hurdle-free trade route.

India: ‘Significant Progress’ on Deal Despite US Sanctions

Indian Ministry of External Affairs spokesperson Anurag Srivastava said that there has been significant progress on the Chabahar port project since 2016. “A longstanding commitment from 2003 relating to port was operationalized in 2016 during the Prime Minister Narendra Modi’s visit to Iran,” he said at a press briefing. “Since then, despite the United States sanctions, there has been significant progress on the port project,” Srivastava said, adding that India’s investment in the Chabahar Port had progressed well.

The port has handled 82 ships with 1.2 million tons of bulk cargo in 8,200 containers since December 2018.

Why is Chabahar Port Important for India?

Chabahar is the only oceanic port that links Iran from the western coast of India and bypasses Pakistan. It is a hassle-free gateway to Afghanistan and Central Asia. Pakistan is a thorn in India’s commerce with Afghanistan and Central Asia as Pakistan denies overland transit facility to India over its soil. India intends to link Chabahar port to the Zaranj-Delaram highway in Afghanistan. Chabahar is also significant as it is also a gateway to INSTC (International North-South Transport Corridor).

Chabahar port will also check the growing Chinese presence in the Arabian sea. China is constructing a deep seaport Gwadar in the Balochistan area of Pakistan. The location of Chabahar and Gwadar ports are in close vicinity. It is also beneficial in terms of countering the Chinese naval presence in the Indian Ocean.

Why the Current Confusion?

Indian newspaper The Hindu, which is widely acknowledging as a communist leaning, reported that the Iranian government has decided to proceed with the long-stalled rail project without India’s participation. It reported that the Iranian railways will construct the project with a $400 million Iranian National Development Fund. Recently, Iranian Transport and Urban Development Minister Mohammad Eslami inaugurated the 628 km track-laying project for the Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan.

The Chinese Angle

According to reports, the doubt is due to China’s 25-year-old $400 billion strategic partnership deal with Iran. The cooperation involves infrastructure development, manufacturing and developing transport and energy facilities, renovating ports, refineries, and other installations, and committed Iranian oil and gas supplies to China during that period.

However, Iranian officials denied a report that Chabahar port, which India took, will be leased to China. Iran proposed a tie-up between the Chinese-run Pakistani port at Gwadar and Chabahar (including projects in the Chabahar duty-free zone) last year.

Iran Denies Dropping India from Deal

According to an Al Jazeera report, Iran has also denied the report that New Delhi was dropped from the rail project. Farhad Montaser, an Iran’s Ports and Maritime Organization official, termed the story “totally false because Iran has not inked any deal with India regarding the Zahedan-Chabahar” railway.

“Iran has only signed two agreements with Indians for investment in Chabahar: one is related to port’s machinery and equipment, and the second is related to India’s investment to the tune of $150m,” Montaser was quoted by the IRNA news agency.

“We had a list of Indian investments in Chabahar port, including the Chabahar railway infrastructure and the railway, but during the negotiations, it was not agreed.” He added, “US sanctions have nothing to do with Iran-India’s cooperation in Chabahar.” In 2018, Washington agreed to a waiver for Chabahar port under the Iran Freedom and Counter-Proliferation Act of 2012, but the newspaper said Indian officials were still wary.

Meanwhile, the Ministry of External Affairs of India has confirmed that India is no longer involved in the Farzad-B gas field project where the country’s Oil and Natural Gas Corporation had signed an agreement for exploration in 2002. Without giving any details, the MEA said that “policy changes” in Iran were responsible for the decision. It remains to be seen how things unfold in the near future.

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