India pledges $500 mn for Chabahar port development

India today signed a bilateral agreement with Iran to develop the Chahbahar port and related infrastructure, and make available about $500 million for this purpose, in a major effort to boost economic growth in the region.

Prime Minister Narendra Modi and the President of Iran Hassan Rouhani in Tehran on 23 May 2016

''We are committed to take steps for early implementation of the agreements signed today,'' visiting Indian Prime Minister Narendra Modi who witnessed the signing of the ceremony in Tehran said later in the day.

The two countries signed as many as 12 pacts, including a contract to develop the first phase of strategic Chabahar port, during Prime Minister Narendra Modi's Iran tour, which has become a historic one.

In a joint statement, Modi and Iranian President Hassan Rouhani stressed that both the countries can improve their economic co-operation.

''We should perceive the agreement as an engine of growth, and I believe it is the beginning of a new era in the Indo-Iran relationship, which was started by Vajpayeeji and Modiji is opening the gate for it,'' ANI quoted minister for road transport and highways and shipping Nitin Gadkari as saying earlier in the day.

Indian Ports Global Pvt, a joint venture between the Jawaharlal Nehru Port Trust and the Kandla Port Trust, will sign a contract with Arya Bandar Company of Iran for developing two terminals and five multi-cargo berth in Phase-1 of the Chabahar port project.

Indian investment in phase-1 will be about $500 million.

An MoU to develop the port was signed in May 2015 between Gadkari and Iran's minister for transport and urban development Dr Abbas Ahmad Akhoundi. Modi is now signing the contract to develop the port.

Chabahar is in South-East Iran and a port here will help India skip Pakistan and open up a route to land-locked Afghanistan with which New Delhi has developed close security ties and economic interests.

From Chabahar port, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 km from the port. The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan's Garland highway, setting up road access to four major cities -- Afghanistan-Herat, Kandahar, Kabul and Mazar-e-Sharif.

The port will be used to ship crude oil and urea, saving India transportation costs. India intends to lease two berths at Chabahar for 10 years. The port will be developed through a special purpose vehicle (SPV), which will invest $85.21 million to convert the berths into a container terminal and a multi-purpose cargo terminal.

"The distance between Kandla and the Chabahar port is less than the distance between New Delhi and Mumbai, and so what this agreement does is to enable us quick movement of goods first to Iran and then onwards to Afghanistan and Russia through a new rail and road link," a PTI report quoted Gadkari as saying.

The prime minister said the agenda and scope of our partnership between the two countries is truly substantial, adding that the outcomes and agreements signed today ''open a new chapter in our strategic partnership.''

Modi said the broad-based economic ties between the two countries are based on the welfare of the people of both countries, adding that expanded trade ties, deeper connectivity, including railways partnerships in oil and gas sector, fertilisers, education and cultural sphere are driving our overall economic engagement.

Complementing the agreement is the signing of a trilateral agreement on transport and transit corridor among India, Afghanistan and Iran.

''Later today we are going to sign the trilateral Transport and Transit Agreement with participation of Iran, India and Afghanistan. It will be a historic occasion. It will open new routes for India, Iran and Afghanistan to connect among themselves, Modi stated.

The prime minister said ''India and Iran also shared a crucial stake in peace, stability and prosperity of the region. We also have shared concerns at the spread of forces of instability, radicalism and terror in our region. We have agreed to consult closely and regularly on combating threats of terrorism, radicalism, drug trafficking and cyber crime. We have also agreed to enhance interaction between our defence and security institutions on regional and maritime security.''

Modi said the past history of our ties has been rich, adding, ''President Rouhani and I would leave no stone unturned to work for its glorious future. Our friendship will be a factor of stability in our region.''

The Indian prime minister will call on Iran's supreme leader Ayatollah Khomeni later today to advance bilateral ties further.

''India and Iran are not new friends. Our dosti is as old as history. Through centuries, our societies have stayed connected through art and architecture, ideas and traditions, and culture and commerce. As friends and neighbours, we have shared interest in each other's growth and prosperity, and joys and sorrows. We can never forget that Iran was among the first countries to come forward in support when earthquake struck my state, Gujarat, in 2001,'' Modi said while complementing Iran's leadership for their far-sighted diplomacy.

The prime minister paid respects to the Guru Granth Sahib at the Bhai Ganga Singh Sabha Gurudwara, shortly after arriving in Tehran last evening.  He complimented the Sikh community in Tehran for keeping our rich heritage and traditions alive for the younger generations. He said Indians believe in Vasudhaiva Kutumbakam – the whole world is our family – and therefore assimilate with everyone easily.

Modi said the occasion of the 350th birth anniversary of Guru Gobind Singh would be celebrated both in India and other parts of the world; and would be leveraged to highlight and generate greater awareness among the younger generation about the martyrdom of the Gurus, and the message of the Holy Guru Granth Sahib.