India’s cabinet yesterday approved a $150m credit line for developing Iran’s Chabahar Port, which India plans to use as a transhipment hub for expanding trade in the region.
Chabahar Port lies on Iran’s southeastern coast and will give India access to Afghanistan without going through Pakistan.
"Chabahar Port lies outside the Persian Gulf in Iran and will help in expanding maritime commerce in the region," an official statement said after a cabinet meeting chaired by Prime Minister Narendra Modi, local media reported.
"India is negotiating this project to facilitate the growing trade and investment with Iran and other countries in the region, notably Afghanistan, and also to provide opportunities to Indian companies to penetrate and enhance their footprint in the region," the statement added.
According to a memorandum of understanding (MoU) signed between the two countries in May last year, the port will be developed through a special purpose vehicle (SPV) which will invest $85m to convert existing berths into a multi-purpose cargo terminal.
India is negotiating this project to facilitate the growing trade and investment with Iran and other countries in the region, notably Afghanistan, and also to provide opportunities to Indian companies to penetrate and enhance their footprint in the region– Indian government statement
Ownership of equipment will be transferred to Iranian side on completion of the 10-year period or for an extended period, based on mutual agreement.
The Iranian side had requested for provision of a credit of $150 million in accordance with the MoU. The operation of the two berths will commence within a period of maximum 18 months after the signing of the contract.
The two berths will be operated by the India Ports Global Private Limited, a company promoted by the Jawaharlal Nehru Port Trust and Kandla Port Trust – two major ports working under the shipping ministry.
The cabinet has now authorised the ministers of finance, external affairs and shipping to approve the final contract with Iran and for resolution of any issue arising in implementation of the project.
The cabinet has also authorised the shipping ministry to form a company in Iran for implementing the Chabahar Port Development Project and related activities, according to the official statement.
Earlier this month Iran invited India to invest in infrastructure projects worth $8bn following the lifting of sanctions, and offered the country a stake in expansion of the second phase of Tehran’s Imam Khomeini international airport, the Economic Times reported.
Iran is geographically positioned to serve as India’s gateway to Afghanistan, Central Asia, Caucus and Russia.
Top image: Chabahar Port lies on Iran’s southeastern coast and will give India access to Afghanistan without going through Pakistan (Google Maps)
