India signed a deal with Iran to build and operate the Chabahar port on May 13, 2024.
Under the agreement, Indian company India Ports Global Limited will equip and operate the port for a period of 10 years to begin with
The Chabahar port has strengthened trade and commerce, providing a much-needed sea access to land-locked Afghanistan and other nations in Central Asia. It gives India access to many more nations in Central Asia.
‘DEAL WILL FORTIFY SUPPLY CHAIN RESISTANCE’
India’s Shipping minister Sarbanada Sonowal said the deal ‘will fortify supply chain resistance across the region’. He added that “Chabahar Port’s significance transcends its role as a mere conduit between India and Iran; it serves as a vital trade artery connecting India with Afghanistan and Central Asian Countries.”
Hours after India inked the deal with Iran, a spokesperson of the US state department sought to warn firms doing business with Iran that they risked US sanctions.
AMERICA: RISK OF SANCTIONS FOR COMPANIES DOING BUSINESS WITH IRAN
During a media briefing, Principal Deputy Spokesperson of the State Department,
Vedant Patel said the US was aware of the deal regarding the Chabahar Port. And while the US would let India take a call on its own bilateral relationship with Iran, it came with a rejoinder. “I will just say, as it relates to the United States, U.S. sanctions on Iran remain in place and we’ll continue to enforce them.” On the possibility of Indian firms potentially facing sanctions, he said “…any entity, anyone considering business deals with Iran, (they) need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions.”
Though he said there was no exception to this, the US had, in fact, made an exception with respect to Chabahar in 2018. The State Department had said it was exempting certain sanctions concerning the development of Chabahar Port and its associated railway, as well as the transport of non-sanctionable goods for Afghanistan’s use, citing the importance of reconstruction and economic development of Afghanistan.
The latest statement from the US doesn’t explain the flip-flop.
WHY CHABAHAR PORT MATTERS TO INDIA
The Chabahar Port provides crucial connectivity for India to Afghanistan, Iran and other countries of Central Asia. This is the first port that an Indian company is managing overseas. This deal also comes at a time that West Asia is already seeing disruption in its existing trade routes amidst the crisis. India has invested equipment worth $25 million and India Ports Global Limited took over the operations of the Chabahar Port in 2018. It serves as a counter to Pakistan’s Gwadar port (that’s being built with China’s help) and China’s Belt and Road Initiative.
