The Chabahar Port becomes operational in Dec 2018. This port has opened a new shipping route to Indian exporter bypassing “Karachi” and “Bandar Abbas” ports. India, Iran and Afghanistan have come together to realign the new Multi-modal Transport route to Central Asia. Therefore, this port will be India’s gateway to reach landlocked Afghanistan. But Indian exporters are not using this port fully due to some logistics problems. After approaching to Indian Port Operator ((IPGPL), Consulate General of Afghanistan and trade association (FIEO-New Delhi), this is an overview of this port project. 

Background

India, Iran and Afghanistan signed MOU on the development of transport infrastructure on the Chabahar-Milak-Zaranj-Delaram route in 2003.

Accordingly, the Trilateral Agreement on Establishment of International Transport and Transit Corridor was signed by these countries on May 23, 2016, in Tehran. The Chabahar Port is a part of this transport project.

The 1st time in March 2012, Indian ships docked at Chabahar carrying 100,000 tonnes of wheat under humanitarian aid to Afghanistan. This was begun to shift trade from the Karachi Port to Chabahar Port for transit to Afghanistan.

India Ports Global and Aria Banader Iranian Port signed a deal in May 2016 to equip and operate the container and multi-purpose terminals at Shahid Beheshti – Chabahar Port Phase-I with a capital investment of $85.21 million on a 10-year lease. The IPGPL took over operations on 24 December 2018 and Shipping service has started in India.

India Ports Global Pvt. Ltd.

The Indian Government has set up a new joint venture company of JNPT and Deendayal Ports to implement this project. The JNPT was owned 60% share, and Kandla was holding a 40 % share. The Indian Government has replaced to JNPT and Deendayal Ports. Now this project is under Sagarmala Programme  India Ports Global has guaranteed to handle 30,000 TEUs by the third year of operations and aims to eventually handle 250,000 TEUs. The IPGPL holds a 10-year concession for the management and operation of two dedicated berths.

Port of Chabahar

The Chabahar harbour features two ports, Shahid Beheshti and Shahid Kalantri, Iran has given

Shahid Beheshti Port to develop India. India Global has invested USD 85.21 million and converted the berths into a container terminal with a draft of 16 meters. The IPGPL has also developed Multi-purpose Cargo Terminal with 7-8 meters draft.  The container berths have been upgraded with 4 new RMQC, 4 RTGC; reach stackers, empty handlers, forklifts, and trailers.

India’s allotment of $235 million for Phase 2 of Chabahar is divided into two parts—$150 million line of credit from the Export-Import Bank for development of port complex and $85 million—allotted after the contract was signed by the two sides for the supply of equipment to develop two berths in the port complex.

Hinterland Connectivity

Chabahar Port is not only Iran's largest seaport but is also a gateway for its landlocked Afghanistan and other countries in Central Asia.

India has spent $134 million during 2005–2009 to construct a road from Delaram in Afghanistan to Zaranj at the Iran-Afghanistan border. Iran has also built a roadway between Milak; close to Zaranj, India will develop a 901-kilometre railway linking Chabahar to the iron ore mines in Hajigak, Afghanistan.

The MOU was also signed for the financing of the planned Chabahar–Zahedan railway, as part of North-South Transport Corridor, by IRCON international in May 2016.

Major Trade Partner of Afghanistan in 2016

Countries            Export   Import  Total     % in Total Trade

Pakistan               0.4          1.68        2.08        20.40%

India      0.39        0.51        0.9          8.80%

UAE       0.24        1.64        1.88        18.20%

Iran        0.02        0.83        0.85        8.30%

USA       0.02        0.87        0.88        8.70%

Others  0.16        3.49        3.64        35.60%

Total      1.23        9.02        10.23     100.00%

Figures are in Billion USD

Advantages

Chabahar Port is located in Sistan-Balochistan Province on Iran’s Southeastern coast which will get sea-land access route to Afghanistan bypassing Pakistan. India and Afghanistan are members of SAARC and both countries take benefit of SAPTA free trade agreement. Iran has also proposed a separate FTA with India. The distance between Kandla and the Chabahar Port is less than the distance between New Delhi and Mumbai.

India has the potential to reap up to $450-500 billion in trade through Central Asia, Russia and Afghanistan. As per the IGPL, Indian trader can keep their goods in Chabahar Free Trade zone before further destination to Central Asia.

Disadvantages

The Federation of Indian Export Organization has submitted its grievances to the Shipping Ministry in

Feb 2020. According to them, the freight rate quote by shipping line for Chabahar is 1300USD per TEU instead of Bandar Abbas is 500USD per TEU. The shipping service is available from Mundra to Chabahar Port is about twice in the month.  But there is weekly service to Bandar Abbas.

There are many transporters to carry cargo from Bandar Abbas to Central Asia. They quote competitive freight rates to the traders. But Chabahar does not have competition and

the importers pay the high transportation cost.

The transportation facilities at Chabahar Port are limited up to Afghanistan only. It doesn't cater up to Tajikistan, Kazakhstan in Central Asia. Therefore, Indian traders are still used Chinese ports to reach Uzbekistan and Kazakhstan.

Exemption from USA sanction

India has allocated Rs100 crore in the recent budget to Foreign Ministry.  Pakistan is also eyeing on Central Asia. Therefore, Pakistan is developing Gwadar Port with Chinese help to reach Afghanistan. The both ports are in same region. This Gwadar, Bandar Abbas and Sohar of Oman are the main competitors to Chabahar Port.

Indian exporters are avoiding Iranian ports due to USA sanction. But now the USA has confirmed special exemption to India in Dec 2019 for Chabahar Port development and rail link. UCO bank deals with import-export documents.

Now there is no payment problem. Therefore, Indian exporters have to use Chabahar Port for the national interest.

Dr Sham Choughule

Mob.: 9969029226 • Email: shamc2001@yahoo.co.in