Iran has allowed India to cooperate in the strategic Chabahar Port, to reach markets in Afghanistan and Central Asia.
Situated in Iran's Sistan-Baluchestan Province, its strategic location has made it a focal point for expansion for the country. Now, with the assistance of nearby nations, the port seems to be on the path to meet its true potential.
In May 2016, India signed an agreement to develop two berths in Chabahar Port, as part of a trilateral pact with Afghanistan and Iran. In return, ports along the western coast of India will be linked with Chabahar, providing a gateway for Indian goods and allowing them to pass through Iran into Afghanistan and beyond.
Fast forward to 2018, and the first expansion of the port has been inaugurated. Iran has leased operational control of Shahid Beheshti — the port's first completed phase — to India for 18 months.
As the port makes progress to increase its capacity even further, Indian media outlets and government officials have consistently highlighted the benefits of the project for connectivity and international relations.
Situated outside the Strait of Hormuz, Chabahar Port is safe from attempts by hostile powers to block trade via this route. It also provides Iran with direct access to the Indian Ocean, one of the most heavily trafficked sea-based trade routes in the world.
Developing Chabahar will allow Iran to receive larger ships, as well as boost employment and strengthen the Iranian economy.
"The location of the port makes it attractive to the maritime industry [because] you don't have that many warm water ports in the northern reaches of the Indian Ocean," said Michael Kugelman, the deputy director of the Asia Program at the Washington-based Woodrow Wilson Center.
Nevertheless, the significance of this development for India cannot be overstated. Historically poor relations with neighboring Pakistan have meant that it has not been able to operate land-based trade routes through the country, hindering its connectivity with markets in Central Asia.
Chabahar will effectively solve the problem by serving as a gateway for India, which the country will bolster with investment on road and rail infrastructure in Iran.
"India has long sought better access to markets in central Asia, particularly gas markets, but it's really been hamstrung in that effort to access those markets because of obstacles in Pakistan,” said Kugelman.
In February, Asia Times reported that Afghanistan had already shifted 80 percent of cargo traffic away from Pakistan's Karachi seaport to Iran's Bandar Abbas and Chabahar ports.
Earlier in March, the Afghan Institute for Strategic Studies (AISS) released a report highlighting the significance of developing Chabahar. Researchers argued that the project would strengthen relations, as well as increase trade and transit ties between the three countries.
According to AISS, India's trade with Central Asia could increase by $400 billion to $500 billion in a matter of years.
So why has it taken so long for the three countries to capitalize on this opportunity? India and Iran did initially form an agreement to develop Chabahar Port in 2003, but since then the project has been hamstrung by geopolitical factors — most notably, the US's shaky relationship with Iran.
While India's investment has been one of the main thrusts behind the Chabahar project, Iran has been pushing for investment from other parties. In March, Iran's Foreign Minister Javad Zarif declared that Tehran had invited Pakistan and China to participate in the Chabahar project.
This move has caused a stir in India, which has effectively been developing the port as a response to developments along the China-Pakistan Economic Corridor (CPEC). From a maritime perspective, CPEC infrastructure projects will link up with Pakistan's Gwadar Port, located barely 72km away from Chabahar.
Since November last year, consignments of wheat have been passing from India to Afghanistan through Chabahar Port, ostensibly proving the effectiveness of the model. Nevertheless, Kugelman said that the country’s tendency to take its time with major infrastructure projects, in combination with geopolitical factors, means it is unlikely that the port will be fully operational by the end of the year.
"[India is] notorious for having a rather inefficient, unwieldy bureaucracy that really struggles to implement major projects, including infrastructure projects, and you see this across the board," he said.
Nevertheless, Kugelman believes that while problems that have plagued Chabahar's development are still prevalent, the will of the countries involved to see the project through has never been stronger.
"[Indian] Prime Minister Modi has clearly taken a personal interest in moving forward with this project, and I think the Iranian leadership feels the same way," he concluded.
*Joe Baker is an economy expert who writes for ship-technology.com.