News ID: 208449
Published: 0338 GMT January 20, 2018

Chabahar Port empowers India-Afghanistan trade

Chabahar Port empowers India-Afghanistan trade

By Sudha Ramachandran

On November 11, 2017, 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.

Iranian ex-president Mohammad Khatami mooted the topic of India developing Chabahar into a trade and transshipment hub during his visit to New Delhi in 2003.

In May 2016, India signed an agreement with Iran to build and operate Chabahar port for ten years. New Delhi agreed to invest $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 1,380km and 200km, respectively).

Similarly, Afghan goods reaching Zahedan would be transported overland to Chabahar from where ships would carry the cargo to India and other countries.

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-Baluchestan, where Chabahar is located.

For India, 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 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.

Indeed, Afghan traders have in recent years opted to trade via Iran's Bandar Abbas port. In 2008-9, 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.

Importantly, Chabahar could have a substantial impact on Gwadar port, just 72km away. Gwadar is far more developed than Chabahar; it has a head-start of at least ten years.

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.



This article originally appeared in the Times of Central Asia.

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