The Chabahar Railway line project of Iran was recently initiated without Indian aid, with which it signed an agreement for the construction. In the process, Iran struck up a partnership elsewhere which might have implications for India as well.
Crux of the Matter
Initiation Without Aid?
By initiating the project without Indian aid, Iran neglected the agreement the two countries had signed in 2016. In its statement, the Iranian government claimed delay in funding and initiation from the Indian side as the reasons for its step. However, it added, that India can join at a “later date” if willing.
The development came at a time when Iran is close to signing a $400 billion agreement with China for the next 25 years.
What Was India’s Deal?
In 2016, a deal was agreed between Indian Railways Construction Ltd (IRCON) and the Iranian Railways as a part of a “trilateral agreement” between India, Iran, and Afghanistan.
According to the agreement, IRCON was to facilitate the construction of a railway line between the Chabahar port and Zahedan, which lies near the Afghanistan border. The aim of the deal was to connect to Central Asia through an “alternate trading route”.
What Went Wrong?
Even though Indian engineers made several visits to the place, the funding and the project itself were never initiated. In 2018, Minister of External Affairs Dr. Jaishankar had claimed that Iran was delaying the project by changing the “terms of agreement” multiple times.
Another cause for the delay is being reported as the fear of US sanctions. India has already stopped purchasing oil from Iran after the US levied sanctions on it, and claimed to impose similar measures on any country dealing with Iran.
The US had removed sanctions from the Chabahar deal, but the equipment supplies were reportedly anxious over possible steps taken against them by it. Consequently, Iran has started the project, initially using $400 million from the Iranian National Development Fund, and expects to finish the project by 2022.
Iran and China are close to agreeing on a $400 billion agreement for 25 years. The deal would enhance “banking, telecommunications, ports, railways” in Iran, which in return would provide “heavily discounted” oil to China for the next 25 years. The project is reportedly a part of China’s Belt and Road Initiative (BRI), through which it aims to strengthen its influence in the Eurasian region.
Chinese influence in the Chabahar port is expected to increase. In 2019, Iran had stated that its Chabahr port can “complement” the Gwadar port, which lies in Pakistan but functions under the control of China. Iran had also offered China a role in the Bandar-e-Jask port, lying 350 km from Chabahar.
- India and Iran collaborated in the 1990s to combat Taliban terrorism.
- India was among the foremost nations to ban The Satanic Verses by Salman Rushdie after the Iranian supreme leader Ayatollah Ruhollah Khomeini issued “fatwa” to kill Rushdie and ban the book.
- 1995: Iran supported India against the sanctions of Organisation of Islamic Cooperation (OIC) on Kashmir issue.
- Iran was the 2nd largest oil supplier to India. However, India stopped the supply in 2011, and has stopped again since 2019 after the US sanctions on Iran.
- 2010: Iranian leader Khameini incited Indian Muslims to separate Kashmir. In return, India lodged a formal complaint to the Iranian ambassador.
- 2013: Iran detained an Indian ship carrying oil in the Persian Gulf, and cited the move as “technical and non-political”.
- The Samjhauta Express is a bi-weekly train that runs between Delhi and Attari in India and Lahore in Pakistan. The word Samjhauta means “agreement”, “accord” and “compromise” in both Hindi and Urdu. As of 2019, the train has been cancelled until further notice due to escalating tensions between India and Pakistan.
- The name Chabahar is a shortened form of Chahar Bahar. Chahar Bahar is made of the Persian words chahar, meaning four; and bahar meaning spring. Hence, it means a place where all four seasons of the year are spring time.
- Ircon International Limited is an engineering and construction organisation, specialized in transport infrastructure. The PSU was established in 1976, by the Government of India. Its primary charter was the construction of railway projects in India and abroad. Ircon has since diversified into other transport and infrastructure segments and with its expanded scope of operations around the world.
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- The Indian Express – ‘Big loss, China gave better deal’: Congress hits out at govt as Iran drops India from Chabahar rail project
- The Hindu – Iran drops India from Chabahar rail project, cites funding delay
- Business Insider – China bags Iran’s friendship with a loan — costs India the crucial Chabahar port project
- Business Standard – Iran not disappointed with India for not buying oil from Tehran: Jaishankar
- The Print – Oil, Chabahar, ‘violence against Muslims’ — why India-Iran ties are going into free fall