The Economic Times daily newspaper is available online now.

    Chabahar, opening routes for India-plus

    Synopsis

    With Monday's agreement, India takes over management of Iran's Chabahar Port for an initial 10-year period. This will change the face of regional connectivity, trade with landlocked countries of Central Asia and Afghanistan, and provide an alternative route that connects the region with Europe. For India and the region, economic benefits come with a strategic sweetener - an alternative that can bypass China and Pakistan's Gwadar Port.

    Chabahar Port deal: US warns of sanctions after India-Iran sign port deal, says 'aware of reports'
    With Monday's agreement, India takes over management of Iran's Chabahar Port for an initial 10-year period. This will change the face of regional connectivity, trade with landlocked countries of Central Asia and Afghanistan, and provide an alternative route that connects the region with Europe. For India and the region, economic benefits come with a strategic sweetener - an alternative that can bypass China and Pakistan's Gwadar Port.

    Chabahar, Iran's only deep seaport with direct access to the ocean, is located beyond the Strait of Hormuz. This is critical to minimising trade disruptions, especially given its integration with the International North-South Transport Corridor (INSTC) project. It would reduce transit times and cut freight costs by an estimated 30%. This, in turn, will enhance India's role in the global supply chain, as well as provide an entry point for humanitarian aid shipments. It bumps up India's energy security as it allows for diversification of import routes for oil and gas, and improves access to critical natural resources, mitigating risks associated with traditional import routes. As India's first overseas port management, here's an opportunity to bolster our infra capabilities.

    Trade, economics apart, this development is of great strategic importance. It gives India a vantage point across regions - West Asia, Indian Ocean, Africa. This isn't just for itself, but also for countries committed to a free and open rules-based international order. India's presence can provide Iran with an off-ramp necessary to ensure peace and stability in the West Asian region. It also allows Tehran to place its eggs in more baskets than in Beijing's. Central Asian states, and Armenia and Azerbaijan also get an alternative, strategic vantage in the Indian Ocean region. This is an opening that can counter plans that China's 'ambitious' vision has for the region. The US and other G7 powers should view India's management of Chabahar as the creation of a safety valve, an alternative where none seemed likely to materialise.

    ( Originally published on May 14, 2024 )

    (Catch all the Business News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.)

    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more
    The Economic Times

    Stories you might be interested in