Chabahar Port and India-Iran Relations

[Tarun]

Five things about Chabahar Port and how India gains from it
By : Anirban Chowdhury | ET Bureau
Updated: May 23, 2016, 05.19 PM IST

The port of Chabahar is located in southeastern Iran in the Gulf of Oman. It is the only Iranian port with direct access to the ocean.

MUMBAI: Prime Minister Narendra Modi's visit to Iran has finally led to the much-awaited signing of the pact for India to develop the strategic Chabahar port. Developing the port is understood to be a major breakthrough for India's trade with West Asia. Four things about this big development:

1) Where is Chabahar?

The port of Chabahar is located in southeastern Iran in the Gulf of Oman. It is the only Iranian port with direct access to the ocean.

2) What does the pact entail and what are India's plans for Chabahar?

a) India will develop and operate the Chabahar port. India Ports Global, a recently formed port project investment arm of the shipping ministry and a joint venture between the Jawaharlal Nehru Port Trust and the Kandla port, will invest $85 million in developing two container berths with a length of 640 metres and three multi-cargo berths.

b) The contract is for 10 years and extendable. It will take 18 months to complete phase one of the port construction. The first two years of the contract are grace period which means India doesn't have to guarantee any cargo for the port.

c) From the third year, India will facilitate 30,000 TEUs (Twenty Foot Equivalent) of cargo at the port. The quantum will rise to 2,50,000 TEUs by the 10th year.

3) Is that all?

No. State run railway body IRCON International will set up a railway line at Chabahar to move goods right up to Afghanistan. The 500-km rail link between Chabahar and Zahedan will link Delhi to the rest of Iran's railway network.

Also, part of the agreement is a free trade zone where a total investment of Rs 1 lakh crore is envisaged. Indian companies would set up a range of industries from aluminium smelter to urea plants in the region. State-owned NALCO will set up an aluminium smelter while private and co-operative fertiliser firms are keen to build urea plants.

India will also supply $400 million of steel rails to Tehran. There are plans of a fertilizer plant through a joint venture with the Iran government. Securing hydrocarbon sources is a priority for India as Delhi and Tehran would look to expand the basket in the coming years.

4) Why is it so important for India?

No other international port has seen the level of involvement and enthusiasm from Chabahar as India. The port will make way for India to bypass Pakistan in transporting goods to Afghanistan using a sea-land route. At present, Pakistan does not allow India to transport through its territory to Afghanistan. It has, however, recently allowed some Afghan shipments to come to India.

This will also give momentum to the International North-South Transport Corridor of which both are initial signatories along with Russia. Iran is the key gateway in this project. It entails the ship, rail, and road routes for moving freight between India, Russia, Iran, Europe and Central Asia. The route primarily involves moving freight from India, Iran, Azerbaijan and Russia. The objective of the corridor is to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Astrakhan etc.

It would counter Chinese presence in the Arabian sea through the support to Pakistan in developing Gwadar port. It can be used to station security vessels for merchant ships off the African coast apart from giving the country a foothold in the western Arabian Sea, which is important as many of its energy imports pass through the route.

5) India has been making efforts to finalise this deal. What took it so long and what is the history?

The port was partially built by India in the 1990s. An initial pact to build the Chabahar portwas first inked during the Atal Bihari Vajpayee's government in 2003, but the deal slipped through during subsequent years.

Negotiations only intensified after nuclear deal between P5 + 1 (the UN Security Council's five permanent members -- China, France, Russia, UK and US -- plus Germany) and Iran last year. But reaching the deal was far from smooth and differences cropped up over ownership as Tehran's Port Authority introduced role of private player in the process. After several rounds of negotiations between India's consortium of JNPT, Kandla Port Authority and Iranian authorities, the contract was deemed ready for signing.

_________________________________________________________________________________________________________________________________________________________________________________

Sushma Swaraj makes unscheduled visit to Iran ahead of Chabahar port inauguration
Saturday, December 02, 2017
By: ET



External Affairs Sushma Swaraj on Saturday paid an unscheduled visit to Iran and had luncheon meeting with her Iranian counterpart Javad Zarif in Tehran.

The visit comes a day before inauguration of the first phase of the Chabahar port development project.

External Affairs Ministry spokesperson Raveesh Kumar said in a tweet that the two ministers discussed issues of mutual interest.

"Reinforcing our traditionally close and civilizational linkages, EAM @SushmaSwaraj had a luncheon meeting with the Foreign Minister of Iran Dr. Javad Zarif in #Tehran. Both sides discussed issues of mutual interest," he said.

Iran's President Hassan Rouhani will inaugurate the first phase of the Chabahar port development project on Sunday and Sushma Swaraj would attend the event.

The first consignment of wheat from India to Afghanistan, that was flagged off by Sushma Swaraj and her Afghan counterpart Salahuddin Rabbani, had reached the Afghan city of Zaranj near the Iran-Afghanistan border last month via the Iranian port of Chabahar, thereby bypassing Pakistan.

It was the first shipment to go to Afghanistan through Chabahar after the trilateral agreement to develop the port as a transport and transit corridor between India, Iran and Afghanistan was signed by Prime Minister Narendra Modi with Iranian and Afghan Presidents Rouhani and Ashraf Ghani, respectively, in May last year.

Sushma Swaraj makes unscheduled visit to Iran ahead of Chabahar port inauguration

 

[Ashwin]

The port is expected to make Chabahar, Iran’s closest sea link to the Indian Ocean, a rival to the Gwadar Port, some 80 km away across the border in Pakistan

Iranian President Hassan Rouhani on December 3 inaugurated a newly built extension to the country's main Arabian Sea outlet, the strategic Chabahar Port on the Gulf of Oman, which more than triples its capacity and poses a challenge for a port under construction in neighbouring Pakistan.
The $340 million project was constructed by a Revolutionary Guard-affiliated company, Khatam al-Anbia, the largest Iranian contractor of government construction projects. It brings the capacity of the port to 8.5 million tonnes of cargo annually, from the previous 2.5 million tonnes.
The extension includes five new piers, two of them for containers allowing cargo vessels with up to 100,000-tonne captaincy to dock.
It is also expected to make Chabahar, Iran’s closest sea link to the Indian Ocean, a rival to Gwadar Port, some 80 km away across the border in Pakistan, which Pakistan has been building with Chinese investment.
Mr. Rouhani, however, downplayed the rivalry in his inauguration speech and said the port will bring “more engagement and unity” among regional countries. “We should go after positive competition,” he said. “We welcome other ports in the region, we welcome Gwadar’s development.”
Iranian state TV said the inauguration was attended by dignitaries from India, Qatar, Afghanistan, Pakistan and other countries.
For India, the investment in Chabahar was important since the port will bolster a trade route for land-locked Central Asian countries that would bypass rival Pakistan. In 2016, India committed up to $500 million for the development of the Chabahar port along with associated roads and rail lines.
And in November, New Delhi shipped its first cargo of wheat to Afghanistanthrough the Iranian port, part of 130,000 tonnes that India plans to export to Afghanistan.
Chabahar also has an international airport and Iran’s Navy and Air Force have bases in the city, adding to the port’s value.

Iran inaugurates Chabahar port

 

[Parul]

https://twitter.com/x/status/937289673029828608

 

[Parul]

https://twitter.com/x/status/937334949216247808

 

[NRJ]

Japan ‘cautious’ about investing in Chabahar port
Japan was ‘cautious’ about investing in Chabahar port because of fresh sanctions imposed by the US on Iran for its suspect nuclear energy programme

New Delhi: Once thought to be keen on investing in the strategic Chabahar port development project in Iran, Japan now seems to be hedging its bets.

A person familiar with the developments said Japan was “cautious” about investing because of fresh sanctions imposed by the US on Iran in July for its suspect nuclear energy programme. In October, US President Donald Trump refused to certify that Iran was abiding by the spirit of a 2015 interim agreement between Iran and the international community that saw some sanctions on the Shia country being lifted.

“Japan has to think in terms of US sanctions,” said the person cited above who did not wish to be named.

On Sunday, Iranian President Hassan Rouhani inaugurated the first phase of Chabahar port—known as the Shahid Beheshti port. It is expected to help India and Afghanistan overcome difficulties imposed by Pakistan to trade directly with each other. In October, India sent a consignment of wheat to Afghanistan via Chabahar marking the first use of the facility for moving a shipment to Afghanistan.

Besides Japan, other countries that have shown interest in developing and investing in Chabahar include South Korea and China, which has already developed the Gwadar port in Pakistan as a key link in its ambitious Belt and Road Initiative.

According to Indian analysts, Japan’s participation would have brought more political clout to the project. Besides, it would have also helped speed up the implementation of the project given Japan’s participation as a foreign collaborator.

For India, Chabahar port, situated in the Sistan-Balochistan province of Iran and lying outside the Persian Gulf, is considered as a gateway for trade with central Asian countries.

Though India and Iran first agreed to develop Chabahar in 2003, it was only in May 2016 during Prime Minister Narendra Modi’s visit to Tehran that the two countries signed a deal under which India is to equip and operate two berths in the first phase with a capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease. Analysts say the delays were due in the first instance to the fact that India was keen to tie up a civil nuclear deal with the US and later due to the tough international sanctions imposed on Iran.

On its part, Japan had previously shown interest in the project with Kenji Hiramatsu, Japan’s ambassador to India, being cited in news reports as saying that the Asian country was keen on collaborating with India on projects in Asia and Africa. He had said the Japanese government was in talks with Tehran and New Delhi for a role in the Chabahar port project along with India.

“We are interested in connectivity projects and to make sure that this region is free and open and an important port like Chabahar is good for regional connectivity... I can’t tell when it will materialise, but we have expressed our interest,” Hiramatsu was cited as saying.

An indication that Japan maybe re-evaluating its position came when the project failed to find a mention in the India-Japan joint statement issued after talks between Japanese Prime Minister Shinzo Abe and Prime Minister Narendra Modi in September.

“Japan is more susceptible to US pressure being a military ally of the US,” said Dilip Sinha, a former Indian diplomat who was in charge of the Iran desk.

Source>>

 

[Tarun]

Tehran won't allow India to use Chabahar port to undermine Pakistan, say Iranian diplomats
Monday, December 11, 2017
By: Tribune.com.PK



On December 3, Iranian President Hassan Rowhani inaugurated the first phase of Chabahar port. Pakistan is not part of the project, yet its minister for ports and shipping was standing next to the Iranian President during the ceremony. This was no coincidence, as Hasil Bizenjo was asked to stand next to Rowhani in a carefully choreographed move.

Days before Iran started preparations for the inauguration ceremony, it invited Pakistan to send a ministerial-level delegation for the event. Tehran followed up with not only the formal invitation but used all available diplomatic channels to make sure that the Pakistani delegation attends the ceremony.

The objective behind this move was clear – Iran wanted to send a message that it would not allow India or any other country to use Chabahar against Pakistan, said a senior Iranian diplomat, who requested not to be named so that he could speak freely on the subject.

Such a firsthand account of close cooperation between Pakistan and Iran is unusual and represents a significant shift in the two neighbours’ ties, which have often been marred by a trust deficit and mutual suspicion.

The turnaround is also important when seen alongside Pakistan’s participation in the Saudi-led counterterrorism coalition. Iran, which is not part of the grouping, considers the initiative an attempt to further Saudi Arabia’s agenda in the region.

That is one of the reasons that Pakistan has been treading a careful path on the issue as it has the potential to undermine ties with Iran.

Despite any allusions to a gulf, Islamabad and Tehran have been moving closer to each other, and diplomats on either side feel that the two sides understand and appreciate each other’s perspective.

Pakistan, according to official sources, has given firm assurances to Iran that Islamabad would not become part of an initiative that targets the Islamic Republic.

Tehran, in return, has pledged that it would not allow any regional country including India to undermine Pakistan’s interests.

Far from India’s portrayal of Chabahar Port, Iran does not see it as a rival to Gwadar Port.

After the inauguration of the first phase, Indian officials and commentators began presenting it as a major strategic victory to sidestep Pakistan.

But the Iranian diplomat played down the India hype as ‘psychological warfare.’ He said the Iranian president has already mentioned that Chabahar and Gwadar ports would complement each other in the future and that a memorandum of understanding to this effect has already been signed.

This unprecedented bonhomie did not happen overnight but after months of rigorous efforts from both sides. The visit of army chief General Qamar Javed Bajwa was the culmination of those efforts.

“It was an excellent, excellent visit,” emphasised the diplomat. The two sides developed a broader understanding of bilateral ties and key regional developments.

He added that military and intelligence cooperation have deepened greatly in the past few months as officials from the security establishments on either side of the border speak to each other more often, something that was not possible just a few years ago.


source: tribune.com.pk/story/1580891/1-tehran-wont-allow-india-use-chabahar-port-undermine-pakistan-say-iranian-diplomats

 

[Nilgiri]

Is there an upgrading on road/rail connection between Bandar Abbas and Chahbahar. It will be natural extension of project to link with the INSTC.

BTW good job finally on these Iran-India logistical projects. I remember the early days when it was just drawings on map during Vajpayee era.

Has anyone done any costings w.r.t having undersea oil/gas pipeline network from Iran/+Oman/+Gulf landing somewhere on Guj/MH coast compared to current ship based conveyance...say over 2 - 3 decades (when oil and gas are still assured dominant world energy source)

 

[Shashank]

Sanction game begins after lull. Now we all know why GOI was slow on Iran project. We were slow and Iranian arrogance slowed us down on everything except for chabahar.

U.S. sanctions five Iranian entities, signals more measures

The United States on Thursday placed sanctions on five subsidiaries of an Iranian industrial group that is considered key in the development and production of the country’s ballistic missiles.

The sanctions imposed by the Office of Foreign Assets Control, an arm of the Treasury Department, targeted companies that are owned or controlled by the Shahid Bakeri Industrial Group, an Iranian defense entity that already is under U.S. sanctions.

Last month, Nikki Haley, the U.S. ambassador to the United Nations, showed reporters fragments from missiles that had been launched by Yemeni rebels into Saudi Arabia. One shredded fragment had the Shahid Bakeri logo on it, seeming proof that it was manufactured in Iran.

The latest sanctions were directed at Shahid Kharrazi Industries, Shahid Sanikhani Industries, Shahid Moghaddam Industries, Shahid Eslami Research Center and Shahid Shustari Industries, all linked to Shahid Bakeri. Each produces a specific component of ballistic missiles, such as guidance and control systems, motor cases or fiber materials.

More at : U.S. imposes sanctions on Iranian entities key to ballistic missile production

 

[Himanshu]

Iran Signs $2b Rail Deal With India

Iran and India signed an agreement worth $2 billion for cooperation in the rail sector.
The agreement was inked in New Delhi on Friday in the presence of Iran's Minister of Roads and Urban Development Abbas Akhoundi and his Indian counterpart Nitin Gadkari.
A part of the agreement pertains to a memorandum of understanding worth $600 million for Iran to purchase locomotives and freight cars from India.
Akhoundi was quoted as saying by the news portal of his ministry that India has expressed readiness to finance the purchases.
The MoU was signed between the Islamic Republic of Iran Railways deputy for transportation planning and economics, Nourollah Beiranvand, and Rajeev Mehrotra, chairman and managing director of RITES Ltd Co.—a government of India enterprise specialized in the field of transport infrastructure.
“This project will come on stream within three years and part of the locomotives will be manufactured in Iran. We are willing and trying to turn the MoU into a contract,” Akhoundi said.
“Our cooperation with India means we will be provided with the latest global advancements in rail technology and industry.”
Mehrotra said the new locomotives will help transport passengers and freight in Iran.
“They will also be used in Chabahar-Zahedan railroad to accelerate growth in Chabahar Port in line with India’s goal to connect to Central Asia and ultimately Europe through this Iranian port,” he said.
The first phase of the strategic Iranian port, which India helped develop, was inaugurated by Iran's President Hassan Rouhani on Dec. 3. The opening of the first phase of Shahid Beheshti Port (out of five phases defined for the project) has tripled its capacity to 8.5 million tons (equal to that of all the northern ports of the country). It will allow the docking of super-large container ships (between 100,000 DWT and 120,000 DWT) and increase India’s connectivity with Afghanistan.
Chabahar is Iran’s only oceanic port city and consists of two separate ports: Shahid Kalantari and Shahid Beheshti.

> Development of Chabahar-Zahedan Railroad
Two other projects embedded in the $2 billion deal include the development of Chabahar-Zahedan Railroad worth $1 billion and rail supply for Iranian projects.
India has agreed to build a 500-km railroad from Chabahar to Zahedan, the capital of Sistan-Baluchestan Province, close to the Afghan border. India’s state-owned IRCON has agreed to build a rail route at a cost of $1.6 billion as part of the transit corridor to Afghanistan.
After connecting Chabahar to Zahedan, the railroad will be linked to Zaranj in Afghanistan. When the Afghan cargo arrives in Zahedan, it can be transported by a 1,380-km railroad to Chabahar and then shipped to India.
India sent its first consignment of wheat for Afghanistan through Chabahar Port in late October.
“The shipment of wheat is a landmark moment, as it will pave the way for operationalization of Chabahar Port as an alternate, reliable and robust connectivity for Afghanistan,” read a statement by India’s External Affairs Ministry.
Six more wheat shipments are scheduled to be sent via the same route in the near future.
Tehran, New Delhi and Kabul signed a trilateral agreement to develop Chabahar in Tehran in May 2016 when Indian Prime Minister Narendra Modi and Afghan President Ashraf Ghani paid a state visit to Iran.
The deal stipulates the development and operation of two terminals and three berths at the port with cargo handling capacities for 10 years.
Based on the agreement, Iran is to provide land in Chabahar Special Economic Zone to Indian companies for setting up petrochemical, fertilizer and other gas-based industries.
In a meeting between Deputy Roads and Urban Development Minister Kheirollah Khademi and Indian Ambassador to Iran Saurabh Kumar last week, the latter announced that track-laying of 100 kilometers of Chabahar-Zahedan Railroad will be completed by March 20.
Noting that $300 million have been invested from domestic resources in the project, the official said India’s financing is important in view of the limited domestic resources.
As for rail supply, Akhoundi said part of it will be directly purchased from India while another major part will be produced in Esfahan Steel Company using Indian steel ingots.
"Domestic rail production, although less costly compared to importing foreign products, is still struggling to get off the ground," deputy head of Construction and Development of Transportation Infrastructures Company, Jabar Ali Zakeri, said.
“We believe in Esfahan Steel Company’s rail production capabilities and know that it’ll be cost and time-efficient. But [ESCO] has yet to reach minimum production capacity,” he was quoted as saying in December.
Based on its deal with the Islamic Republic of Iran Railways, ESCO has agreed to provide the company with 40,000 tons of rails by the end of the current Iranian year (March 20).
Zakeri noted that CDTIC also recently reached an agreement with ESCO for the purchase of 25,000 tons of UIC60 rail made using Indian and Russian steel materials.
In November 2016, ESCO launched a 400,000-ton per year rolling mill with the participation of the German Kuttner Company to produce rail and wide-flange beams, but it has not sold any to the national railroad company yet and only some trial products have been produced up to now, S&P Global Platts reported.

> Rail Fleet Renewal, Expansion
With the aim of reducing road traffic and battling air pollution, the Ministry of Roads and Urban Development has placed the development of Iran's rail sector on top of its agenda.
Besides expanding Iran's rail network and increasing connectivity both inside and outside the country, the ministry has moved to renew the country's aging rail fleet.
French company Alstom signed a trilateral "shareholders agreement" with the Industrial Development and Renovation Organization of Iran and Iranian Rail Industries Development Company in July to manufacture 1,000 subway wagons at IRICO's facilities within three years.
Later in December, South Korean rolling stock manufacturer Hyundai Rotem signed a contract worth €720 million with the Islamic Republic of Iran Railways to produce 450 suburban wagons in Iran.
And a few days later, Russia signed a €3 billion finance deal with Iran for the joint manufacture of 20,000 freight cars, 1,000 passenger cars, 350 locomotives and rail transportation equipment.
Iran has another agreement worth €2.5 billion with Russia’s CJSC Transmashholding for the joint production of rolling stock in Iran. Based on this contract signed in late July, a joint venture is to be formed between IDRO and the Russian company, with the Russian side holding an 80% stake and the Iranian side 20%.
Transmashholding CEO Kirill V. Lipa told Financial Tribune after the signing of the contract that the capacity of the joint venture will depend on the depth of localization.
“For assembling, we’re thinking about 300-400 units per year,” he said.
China has also played a major role in developing Iran's rail sector, as Iran lies in the heart of the so-called New Silk Road–a 3,200-kilometer railroad project that ultimately sees Urumqi, the capital of China's western Xinjiang Province linked to the Iranian capital Tehran, connecting Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way.
China signed a contract with Iran in July to finance the electrification of a 926-km railroad from Tehran to the eastern city of Mashhad in Khorasan Razavi Province with a $1.5 billion loan.

 

[Ashwin]

Iran Signs $2b Rail Deal With India

Iran and India signed an agreement worth $2 billion for cooperation in the rail sector.
The agreement was inked in New Delhi on Friday in the presence of Iran's Minister of Roads and Urban Development Abbas Akhoundi and his Indian counterpart Nitin Gadkari.
A part of the agreement pertains to a memorandum of understanding worth $600 million for Iran to purchase locomotives and freight cars from India.
Akhoundi was quoted as saying by the news portal of his ministry that India has expressed readiness to finance the purchases.
The MoU was signed between the Islamic Republic of Iran Railways deputy for transportation planning and economics, Nourollah Beiranvand, and Rajeev Mehrotra, chairman and managing director of RITES Ltd Co.—a government of India enterprise specialized in the field of transport infrastructure.
“This project will come on stream within three years and part of the locomotives will be manufactured in Iran. We are willing and trying to turn the MoU into a contract,” Akhoundi said.
“Our cooperation with India means we will be provided with the latest global advancements in rail technology and industry.”
Mehrotra said the new locomotives will help transport passengers and freight in Iran.
“They will also be used in Chabahar-Zahedan railroad to accelerate growth in Chabahar Port in line with India’s goal to connect to Central Asia and ultimately Europe through this Iranian port,” he said.
The first phase of the strategic Iranian port, which India helped develop, was inaugurated by Iran's President Hassan Rouhani on Dec. 3. The opening of the first phase of Shahid Beheshti Port (out of five phases defined for the project) has tripled its capacity to 8.5 million tons (equal to that of all the northern ports of the country). It will allow the docking of super-large container ships (between 100,000 DWT and 120,000 DWT) and increase India’s connectivity with Afghanistan.
Chabahar is Iran’s only oceanic port city and consists of two separate ports: Shahid Kalantari and Shahid Beheshti.

> Development of Chabahar-Zahedan Railroad
Two other projects embedded in the $2 billion deal include the development of Chabahar-Zahedan Railroad worth $1 billion and rail supply for Iranian projects.
India has agreed to build a 500-km railroad from Chabahar to Zahedan, the capital of Sistan-Baluchestan Province, close to the Afghan border. India’s state-owned IRCON has agreed to build a rail route at a cost of $1.6 billion as part of the transit corridor to Afghanistan.
After connecting Chabahar to Zahedan, the railroad will be linked to Zaranj in Afghanistan. When the Afghan cargo arrives in Zahedan, it can be transported by a 1,380-km railroad to Chabahar and then shipped to India.
India sent its first consignment of wheat for Afghanistan through Chabahar Port in late October.
“The shipment of wheat is a landmark moment, as it will pave the way for operationalization of Chabahar Port as an alternate, reliable and robust connectivity for Afghanistan,” read a statement by India’s External Affairs Ministry.
Six more wheat shipments are scheduled to be sent via the same route in the near future.
Tehran, New Delhi and Kabul signed a trilateral agreement to develop Chabahar in Tehran in May 2016 when Indian Prime Minister Narendra Modi and Afghan President Ashraf Ghani paid a state visit to Iran.
The deal stipulates the development and operation of two terminals and three berths at the port with cargo handling capacities for 10 years.
Based on the agreement, Iran is to provide land in Chabahar Special Economic Zone to Indian companies for setting up petrochemical, fertilizer and other gas-based industries.
In a meeting between Deputy Roads and Urban Development Minister Kheirollah Khademi and Indian Ambassador to Iran Saurabh Kumar last week, the latter announced that track-laying of 100 kilometers of Chabahar-Zahedan Railroad will be completed by March 20.
Noting that $300 million have been invested from domestic resources in the project, the official said India’s financing is important in view of the limited domestic resources.
As for rail supply, Akhoundi said part of it will be directly purchased from India while another major part will be produced in Esfahan Steel Company using Indian steel ingots.
"Domestic rail production, although less costly compared to importing foreign products, is still struggling to get off the ground," deputy head of Construction and Development of Transportation Infrastructures Company, Jabar Ali Zakeri, said.
“We believe in Esfahan Steel Company’s rail production capabilities and know that it’ll be cost and time-efficient. But [ESCO] has yet to reach minimum production capacity,” he was quoted as saying in December.
Based on its deal with the Islamic Republic of Iran Railways, ESCO has agreed to provide the company with 40,000 tons of rails by the end of the current Iranian year (March 20).
Zakeri noted that CDTIC also recently reached an agreement with ESCO for the purchase of 25,000 tons of UIC60 rail made using Indian and Russian steel materials.
In November 2016, ESCO launched a 400,000-ton per year rolling mill with the participation of the German Kuttner Company to produce rail and wide-flange beams, but it has not sold any to the national railroad company yet and only some trial products have been produced up to now, S&P Global Platts reported.

> Rail Fleet Renewal, Expansion
With the aim of reducing road traffic and battling air pollution, the Ministry of Roads and Urban Development has placed the development of Iran's rail sector on top of its agenda.
Besides expanding Iran's rail network and increasing connectivity both inside and outside the country, the ministry has moved to renew the country's aging rail fleet.
French company Alstom signed a trilateral "shareholders agreement" with the Industrial Development and Renovation Organization of Iran and Iranian Rail Industries Development Company in July to manufacture 1,000 subway wagons at IRICO's facilities within three years.
Later in December, South Korean rolling stock manufacturer Hyundai Rotem signed a contract worth €720 million with the Islamic Republic of Iran Railways to produce 450 suburban wagons in Iran.
And a few days later, Russia signed a €3 billion finance deal with Iran for the joint manufacture of 20,000 freight cars, 1,000 passenger cars, 350 locomotives and rail transportation equipment.
Iran has another agreement worth €2.5 billion with Russia’s CJSC Transmashholding for the joint production of rolling stock in Iran. Based on this contract signed in late July, a joint venture is to be formed between IDRO and the Russian company, with the Russian side holding an 80% stake and the Iranian side 20%.
Transmashholding CEO Kirill V. Lipa told Financial Tribune after the signing of the contract that the capacity of the joint venture will depend on the depth of localization.
“For assembling, we’re thinking about 300-400 units per year,” he said.
China has also played a major role in developing Iran's rail sector, as Iran lies in the heart of the so-called New Silk Road–a 3,200-kilometer railroad project that ultimately sees Urumqi, the capital of China's western Xinjiang Province linked to the Iranian capital Tehran, connecting Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way.
China signed a contract with Iran in July to finance the electrification of a 926-km railroad from Tehran to the eastern city of Mashhad in Khorasan Razavi Province with a $1.5 billion loan.

 

[Himanshu]

 

[RISING SUN]

Iran Signs $2 Billion Rail Deal with India
Iran and India have signed a deal worth 2 billion US dollars for cooperation in the rail sector, a report said. The agreement was inked Friday in India’s capital New Delhi in the presence of Abbas Akhoundi, Iran’s minister of roads and urban development, and his Indian counterpart Nitin Gadkari, the report said, according to Xinhua news agency.

The deal included a memorandum of understanding (MoU) worth 600 million dollars that will enable Iran to purchase locomotives and freight cars from India.

Akhoundi said the project will be fully implemented within three years. For his part, Gadkari said the new trains will help transport passengers and freight in Iran.

“They will also be used in the Chabahar-Zahedan railroad to accelerate development of the Chabahar Port in line with India’s goal to connect to Central Asia and ultimately Europe through this Iranian port,” he said.
Iran and India, two major members of the Non-Aligned Movement (NAM), have increased efforts in recent years to establish closer trade ties.
India is one of the major customers of Iran’s crude oil.
Iran Signs $2 Billion Rail Deal with India

 

[RISING SUN]

Iran's Chabahar Port Empowers India-Afghanistan Trade at Pakistan's Expense
On November 11, a consignment of 15,000 tons of wheat arrived in Afghanistan from India via Iran’s Chabahar port. This is an important milestone for the three countries as it marks the operationalization of the transit trade agreement they signed in 2017. In addition, the first phase of the development of Chabahar port has been completed. It is expected to energize Iran’s economy and provide India with a gateway for overland access to Afghanistan and the Central Asian states. Importantly, landlocked Afghanistan now has another outlet to the sea, reducing its dependence on Pakistani ports. This will reduce Islamabad’s influence over Afghanistan.

BACKGROUND: Iranian President Mohammed Khatami mooted the topic of India developing Chabahar into a trade and transshipment hub during his visit to New Delhi in 2003. India at first embraced the idea enthusiastically but then its interest waned. It was concerned over the project’s economic viability, especially in the context of international sanctions on Iran over its nuclear program. Under pressure from the US to distance itself from Iran, India dragged its feet on the Chabahar project.
India’s interest in Chabahar port revived from 2012 onwards. US-Iran relations were improving and with nuclear-related sanctions on the Iranian economy being lifted in January 2016, the port’s economic prospects brightened. India’s ambitions to expand trade with and influence in Afghanistan and Central Asia had grown but Pakistan refused India overland access to Afghanistan. Consequently, Indian investment in Chabahar port’s development as a gateway for overland trade to and through Afghanistan became necessary.
Importantly, China’s presence in the region has grown remarkably over the past decade. Not only has Beijing funded, built and begun to operate Gwadar port in Pakistan, but is also financing and constructing the China-Pakistan Economic Corridor (CPEC), a trade corridor linking Gwadar with China’s Xinjiang province. Worryingly for India, Chinese naval ships have docked at Gwadar.
Moreover, Beijing also demonstrated an interest in developing Chabahar port and Iran was not averse to this prospect. Concerned of being edged out of the project, Delhi expedited its participation in the Chabahar project. In May 2016, India signed an agreement with Iran to build and operate Chabahar port for ten years. New Delhi agreed to invest US$ 500 million in developing two terminals and cargo berths as well as other related infrastructure. A trilateral agreement signed by India, Iran and Afghanistan provided for transit trade through Chabahar.
The plan is for shipments from India to be offloaded at Chabahar port, where the cargo would be loaded on to trucks and trains heading to Zahedan near Iran’s border with Afghanistan and onward to Zaranj in Afghanistan (the distance between Chabahar –Zahedan and Zahedan – Zaranj are 1,380 km and 200 km, respectively). Similarly, Afghan goods reaching Zahedan would be transported overland to Chabahar from where ships would carry the cargo to India and other countries.
IMPLICATIONS: Chabahar port has immense strategic value. Its location outside the Strait of Hormuz reduces the Iranian economy’s vulnerability to a blockade of the Strait by hostile powers. Situated on the Makran coast, it gives Iran direct access to the Indian Ocean.
Chabahar port is Iran’s only deep-sea port. Its development will enable Iran to receive high tonnage ships, which was not possible in the past, forcing Iran to route such ships to Dubai. Most international shipping is conducted via high tonnage cargo vessels and Chabahar can henceforth expect to benefit from the docking of these vessels, especially once Chabahar is linked to the International North-South Transport Corridor. Industrial development in and around the port complex is also likely to strengthen the Iranian economy and boost employment in Sistan-Baluchistan, Iran’s least developed province, where Chabahar is located.
For India, which has so far been denied overland access to Afghanistan and Central Asia by Pakistan, Chabahar port opens up enormous opportunities as it will function as a gateway to overland trade corridors linking India to resource-rich Central Asia and European markets.
Delhi has so far been airlifting cargo to Afghanistan, constraining its role in the war-torn country’s reconstruction. With overland routes from Chabahar to Afghanistan opening up, this is poised to change. In 2009, India completed the construction of a 215-km-long highway linking Zaranj with Delaram and several other cities on Afghanistan’s Garland Highway. This road network will multiply India’s access to Afghanistan and subsequently to Central Asia, and expand its influence in the region.
For Afghanistan, access to the sea via Chabahar port will ease its dependence on Pakistani ports, which are an uncertain option given the unstable relations between Islamabad and Kabul. This will reduce Afghanistan’s vulnerability to Pakistani pressure.
Afghan traders complain of harassment from Pakistani officials as their trucks are often prevented from crossing into Pakistan, and say that customs tariff rates are increased without warning. Overland routes via Iran to Iranian ports are safer, they argue, and more cost-effective than the routes to Karachi port.
Indeed, Afghan traders have in recent years opted to trade via Iran’s Bandar Abbas port. In 2008-09 nearly 60 percent of Afghan imports were transited through Pakistan. In 2016 this figure dropped to less than 30 percent. Afghan trade through Iran increased from 15-20 percent to 37-40 percent during the same period. Afghan trade via Pakistan can be expected to drop further when Chabahar port becomes operational.
According to Indian analysts, Pakistan’s main concern in light of these developments is losing its leverage with Kabul, rather than losing Afghanistan’s transit trade to Iran. Kabul is likely to gain greater confidence in dealing with Pakistan on the issue of transit trade and could, for instance, decide to deny Pakistan overland access through Afghan territory to Central Asia. Afghan President Ashraf Ghani has repeatedly articulated this threat in recent years in response to Pakistan’s refusal to allow Afghanistan-India overland trade via Wagah.
Importantly, Chabahar could have a substantial impact on Gwadar port, just 72 km away. Gwadar is far more developed than Chabahar; it has a head-start of at least ten years. Transport links between Gwadar and Xinjiang are progressing and CPEC will also hook up with the network of the Belt and Road Initiative. These advantages notwithstanding, Gwadar needs to accommodate more trade than CPEC will bring – it also needs to transit cargo to and from Central Asia. Pakistan will need Kabul on its side to make this happen. The question is whether Kabul, newly freed from its dependence on Pakistani ports, will oblige.
CONCLUSIONS: The start of transit trade through Chabahar port is a momentous event. It is expected to pave the way for India’s increased trade with and influence in Afghanistan and Central Asia as well as Iran’s rise as a global transshipment hub. However, the most significant change it will bring is in Afghanistan’s relationship with Pakistan. By providing Afghanistan with another outlet to the sea, Chabahar reduces Kabul’s dependence on Pakistan. Indeed, it could provide Kabul with new confidence, even leverage in dealing with Pakistan, especially on trade matters.
On November 11, a consignment of 15,000 tons of wheat arrived in Afghanistan from India via Iran’s Chabahar port. This is an important milestone for the three countries as it marks the operationalization of the transit trade agreement they signed in 2017. In addition, the first phase of the development of Chabahar port has been completed. It is expected to energize Iran’s economy and provide India with a gateway for overland access to Afghanistan and the Central Asian states. Importantly, landlocked Afghanistan now has another outlet to the sea, reducing its dependence on Pakistani ports. This will reduce Islamabad’s influence over Afghanistan.

BACKGROUND: Iranian President Mohammed Khatami mooted the topic of India developing Chabahar into a trade and transshipment hub during his visit to New Delhi in 2003. India at first embraced the idea enthusiastically but then its interest waned. It was concerned over the project’s economic viability, especially in the context of international sanctions on Iran over its nuclear program. Under pressure from the US to distance itself from Iran, India dragged its feet on the Chabahar project.
India’s interest in Chabahar port revived from 2012 onwards. US-Iran relations were improving and with nuclear-related sanctions on the Iranian economy being lifted in January 2016, the port’s economic prospects brightened. India’s ambitions to expand trade with and influence in Afghanistan and Central Asia had grown but Pakistan refused India overland access to Afghanistan. Consequently, Indian investment in Chabahar port’s development as a gateway for overland trade to and through Afghanistan became necessary.
Importantly, China’s presence in the region has grown remarkably over the past decade. Not only has Beijing funded, built and begun to operate Gwadar port in Pakistan, but is also financing and constructing the China-Pakistan Economic Corridor (CPEC), a trade corridor linking Gwadar with China’s Xinjiang province. Worryingly for India, Chinese naval ships have docked at Gwadar.
Moreover, Beijing also demonstrated an interest in developing Chabahar port and Iran was not averse to this prospect. Concerned of being edged out of the project, Delhi expedited its participation in the Chabahar project. In May 2016, India signed an agreement with Iran to build and operate Chabahar port for ten years. New Delhi agreed to invest US$ 500 million in developing two terminals and cargo berths as well as other related infrastructure. A trilateral agreement signed by India, Iran and Afghanistan provided for transit trade through Chabahar.
The plan is for shipments from India to be offloaded at Chabahar port, where the cargo would be loaded on to trucks and trains heading to Zahedan near Iran’s border with Afghanistan and onward to Zaranj in Afghanistan (the distance between Chabahar –Zahedan and Zahedan – Zaranj are 1,380 km and 200 km, respectively). Similarly, Afghan goods reaching Zahedan would be transported overland to Chabahar from where ships would carry the cargo to India and other countries.
IMPLICATIONS: Chabahar port has immense strategic value. Its location outside the Strait of Hormuz reduces the Iranian economy’s vulnerability to a blockade of the Strait by hostile powers. Situated on the Makran coast, it gives Iran direct access to the Indian Ocean.
Chabahar port is Iran’s only deep-sea port. Its development will enable Iran to receive high tonnage ships, which was not possible in the past, forcing Iran to route such ships to Dubai. Most international shipping is conducted via high tonnage cargo vessels and Chabahar can henceforth expect to benefit from the docking of these vessels, especially once Chabahar is linked to the International North-South Transport Corridor. Industrial development in and around the port complex is also likely to strengthen the Iranian economy and boost employment in Sistan-Baluchistan, Iran’s least developed province, where Chabahar is located.
For India, which has so far been denied overland access to Afghanistan and Central Asia by Pakistan, Chabahar port opens up enormous opportunities as it will function as a gateway to overland trade corridors linking India to resource-rich Central Asia and European markets.
Delhi has so far been airlifting cargo to Afghanistan, constraining its role in the war-torn country’s reconstruction. With overland routes from Chabahar to Afghanistan opening up, this is poised to change. In 2009, India completed the construction of a 215-km-long highway linking Zaranj with Delaram and several other cities on Afghanistan’s Garland Highway. This road network will multiply India’s access to Afghanistan and subsequently to Central Asia, and expand its influence in the region.
For Afghanistan, access to the sea via Chabahar port will ease its dependence on Pakistani ports, which are an uncertain option given the unstable relations between Islamabad and Kabul. This will reduce Afghanistan’s vulnerability to Pakistani pressure.
Afghan traders complain of harassment from Pakistani officials as their trucks are often prevented from crossing into Pakistan, and say that customs tariff rates are increased without warning. Overland routes via Iran to Iranian ports are safer, they argue, and more cost-effective than the routes to Karachi port.
Indeed, Afghan traders have in recent years opted to trade via Iran’s Bandar Abbas port. In 2008-09 nearly 60 percent of Afghan imports were transited through Pakistan. In 2016 this figure dropped to less than 30 percent. Afghan trade through Iran increased from 15-20 percent to 37-40 percent during the same period. Afghan trade via Pakistan can be expected to drop further when Chabahar port becomes operational.
According to Indian analysts, Pakistan’s main concern in light of these developments is losing its leverage with Kabul, rather than losing Afghanistan’s transit trade to Iran. Kabul is likely to gain greater confidence in dealing with Pakistan on the issue of transit trade and could, for instance, decide to deny Pakistan overland access through Afghan territory to Central Asia. Afghan President Ashraf Ghani has repeatedly articulated this threat in recent years in response to Pakistan’s refusal to allow Afghanistan-India overland trade via Wagah.
Importantly, Chabahar could have a substantial impact on Gwadar port, just 72 km away. Gwadar is far more developed than Chabahar; it has a head-start of at least ten years. Transport links between Gwadar and Xinjiang are progressing and CPEC will also hook up with the network of the Belt and Road Initiative. These advantages notwithstanding, Gwadar needs to accommodate more trade than CPEC will bring – it also needs to transit cargo to and from Central Asia. Pakistan will need Kabul on its side to make this happen. The question is whether Kabul, newly freed from its dependence on Pakistani ports, will oblige.
CONCLUSIONS: The start of transit trade through Chabahar port is a momentous event. It is expected to pave the way for India’s increased trade with and influence in Afghanistan and Central Asia as well as Iran’s rise as a global transshipment hub. However, the most significant change it will bring is in Afghanistan’s relationship with Pakistan. By providing Afghanistan with another outlet to the sea, Chabahar reduces Kabul’s dependence on Pakistan. Indeed, it could provide Kabul with new confidence, even leverage in dealing with Pakistan, especially on trade matters.

 

[Pankaj]

India managed to get 18 months operational access to Chabahar port. We are spending 500 million dollar for its development, while China spends 1 Billion dollar on SL port and gets access for 99 years. Any thoughts?

India to get control of key port in Iran for 18 months - Times of India

 

[Himanshu]

India managed to get 18 months operational access to Chabahar port. We are spending 500 million dollar for its development, while China spends 1 Billion dollar on SL port and gets access for 99 years. Any thoughts?

India to get control of key port in Iran for 18 months - Times of India

Cuz Chabahar is Iranian port, read post #9 for more info. Btw

The deal stipulates the development and operation of two terminals and three berths at the port with cargo handling capacities for 10 years.

 

[ManavantraTruti]

Full Marks for Body Language,

 

[Ashwin]

The recently concluded visit by Iranian President Rouhani to India was full of optics: his visit to the Qutub Shahi mosque at Hyderabad, then his address at the ORF (Delhi based think tank) hit all the right notes but if we look at the joint communique released at the end of the “substantive” talks we find that the visit accomplished less than what was being promised from both the sides.

The joint statement has laid stress on “connectivity”. It seems that the bilateral relations revolve around the port project and the subsequent advantages it will have not only for Afghanistan but to larger Central Asian Region. India has invested a lot of capital and now wants to benefit from the project, not only in terms of trade but also strategically. But if we closely follow the developments w.r.t. Chabahar, we find that the pace of development is sluggish. The port is only partially operational. India has been trying to develop the port as its answer to Gwadar and China’s Belt and Road initiative in the region by providing an alternate route for trade and commerce with Central Asia and Afghanistan. India’s biggest weakness lies not in striking of agreements and deals, but in follow-up and execution of those deals and projects. There are a large number of irritants which have repeatedly stalled the project.

The biggest irritant has been funding as well as the role international sanctions have played throughout this whole process. Despite our commitment to the project and its eventual realisation, India has been apprehensive about the US and its response to JCPOA; and its eventual impact on our investments in Iran. We have ignored the fact that French and German firms have made large investments and have been trying to court maximum areas for their benefit as Iran opens up its economy for international investment. The whole purpose of the visit was to enhance bilateral trade ties and the visit appears to have come short on the promise.

India has also not yet allowed Iranian banks to open their branches in India. However, in a welcome move, investment in Iran in Rupee terms has been allowed. The Indian investments in Rupees will get converted into Iranian Rial through banking mechanism allowing investments from here, including in the Chabahar Port complex.

The visit further failed to address the pending issue of ensuring Indian investments in the Farzad-B gas field. It was announced that India and Iran need to move away from the traditional buyer-seller relationship when it comes to the energy sector but no measure to finish decade-old negotiations on Farzad gas field has been announced. Instead, we hear that the pace of negotiations needs to be increased for enhanced energy cooperation. The delay in completion of Chabahar project, the roadblock over Farzad-B gas block should not be allowed to act as hindrances in the development of bilateral ties.

Although, the visit did achieve few things; the finalisation of the Double Taxation Avoidance Agreement is welcomed as a step that would promote business environment but both sides need to work on lowering bilateral trade tariffs: negotiations on Preferential Trade Agreement as well as conclusion of Bilateral Investment Treaty in a fixed time frame need to be accomplished.

The unanimity of thought on the security front was also witnessed. Both the countries have a common stance on confronting terrorism and extremism, and are determined to confront terrorism and extremism through cultural interaction and the exchange of information and experience.

The outcome from the visit is debatable but it cannot be denied that progress in the right direction has been made, however, the journey is far from over and we have a long way to go to accomplish our strategic goals in the region.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Iranian President Rouhani came but offered little to India

 

[The enlightened]

India has been trying to develop the port as its answer to Gwadar and China’s Belt and Road initiative in the region by providing an alternate route for trade and commerce with Central Asia and Afghanistan

This is quite frankly Chi-Pak propaganda which our clueless opinion-writers have bought hook, line and sinker.

The port was envisioned as a Pakistan-free gateway to Central Asia which despite physical proximity (bird's eye view) was cut-off. Secondly to remove Pakistan's grip over Afghanistan's LoC with the rest of the world. BRI, Gwadar were never in consideration when the port investment was first mooted in 2002 or even before.

 

[Kshithij Sharma]

The biggest take away is the discount in freight/shipping chargeas being rised from 62% to 100%. Earlier it was 80% which was reduced to 62% following India reducing oil imports.

So, we can take the additional discount to be 20%. The cost for shipping is about 1.5%-2% of the oil cost. So, with oil at $65, the additional discount of 20% shipping will be $0.2-0.25 which is a significant amount considering that India already imported 0.5 million barrels a day from Iran in January 2017 which can go to 0.7 million barrels a day. The additional 20% discount will amount to 40-50 million dollars for the current level imports of 0.5 million barrels a day over a year. But, if we take the whole discount of 100%, the total discount will come to 160-200 million dollars a year. As the crude oil imports increase, the savings will also increase.

Next, chabahar port has been handed over to India for next 18 months which means there will be no handling charges by iran.

Also, investment in iranian infrastructure can now be done by India in rupees which will help boost Indian income and also foreign exchange.

 

[Ashwin]

The port was envisioned as a Pakistan-free gateway to Central Asia which despite physical proximity (bird's eye view) was cut-off. Secondly to remove Pakistan's grip over Afghanistan's LoC with the rest of the world. BRI, Gwadar were never in consideration when the port investment was first mooted in 2002 or even before.

True, But times changed and now Indian thinkers itself look at it from a BRI angle because otherwise there isn't enough reason for Iran not to join it wholeheartedly. Iran doesn't have such a deep sea port and Gwadar is very close.