India and Iran are moving slowly and steadily to overcome all hurdles to convert the International North-South Transport Corridor (INSTC) into a bigger economic corridor with better prospects and potential than the China-Pakistan Economic Corridor (CPEC).
President Hassan Rouhani, on his first state visit to New Delhi after assuming office in 2013, held talks with PM Modi, and the two sides moved forward on several contentious issues stuck for decades due to sanctions and now because of pressure from Washington, thequint.com wrote.
Among the agreements signed, the most important was the lease contract for one berth, multipurpose and container terminal at Shahid Beheshti Port — Phase 1 of Chabahar for 18 months, between Port and Maritime Organization (PMO) of Iran and India Ports Global Limited (IPGL). IPGL will now begin full operations immediately, using one existing spare berth after installing additional equipment at terminal one, four more berths will be also constructed at terminal 1 and 2 in phases with an investment of $150 million after taking them on lease for ten years.
India has built the 215km-long strategic Delaram-Zaranj highway at a cost of Rs 600 crore, completing the road link from Chabahar to Kabul. Strategists in New Delhi want Chabahar port to become the major point for an economic corridor from India-Arabian Sea-Iran-Afghanistan-Central Asia to Europe and become a better alternative to Gwadar Port just 75km away in Pakistan at the starting point of $62 billion CPEC China Pakistan Economic corridor from the Arabian Sea.
To clear the way for an economic corridor the "two sides have agreed to hold a meeting in Tehran at the earliest to include Chabahar in the INSTC framework", an India official said on condition of anonymity.
He confirmed that "negotiations between the Indian and Iranian companies are on for financing the railways in Iran", to complete the missing rail link from Chabahar to Europe. A high-level delegation led by S.K. Choudhary, CMD of IRCON — an Indian government organization — is now in Iran to finalize various contracts worth $1.6 billion, for a 663-km railway line from Chabahar to Zahedan.
IRCON has signed an MoU with Construction, Development of Transport and Infrastructure Company of Iran (CDTIC), after doing a prefeasibility study for this route.
IRCON is in the process of finalizing various funding options, including loans from EXIM Bank. India's recent accession to United Nations TIR (Transports Internationaux Routiers) Convention on international customs and transports to facilitate smooth movement of goods across international borders, and the Ashgabat Agreement which envisages setting up of an international transport and transit corridor linking central Asia with the Persian Gulf, are additional steps at enhancing regional connectivity and linking regional centers of economic growth from India-Iran-Central Asia-Europe.
Business leaders in the Iranian president's delegation are upbeat about these new opportunities, as it offers many advantages as compared to the CPEC.
CPEC first goes to China from Gwadar and then turns to Russia and Europe which is a much longer route than the INSTC.
India is roping in Japan as a strategic partner to rival CPEC. JICA, JBIC and Japanese Banks have expressed interest in funding the rail link and the International North-South Transport Corridor and invest in the Chabahar Free Trade Zone. OVL has offered to invest $5.5 billion in a LNG terminal with petrochemical and fertilizer production complex at Chabahar.
However, the plans by Indian aluminum producer NALCO to set a green field for $2.8 billion aluminum smelter plant of 0.5 million metric tons near Chabahar Free Trade Zone has not made any progress, as there in no assured gas supply for the captive power plant of 1,200 MW.
Both countries have also signed a double taxation avoidance agreement to facilitate the increasing trade which expects a big boost in the coming years.
Hossein Yaqoubi Myab, the director general for international affairs at the Central Bank of Iran, who traveled with the presidential delegation said, "One bank (Bank Pasargad) has been ratified and approved to open a branch (in India)... Saman Bank will also open a representative office" in India very soon.
*Kanwaljeet Singh is a New Delhi-based freelance journalist.