India to sign port deal with Iran, ignoring US warning against haste

Published: May 5, 2015
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PHOTO: REUTERS

PHOTO: REUTERS

India will push ahead this week with plans to build a port in southeast Iran, two sources said, with Prime Minister Narendra Modi keen to develop trade ties with Central Asia and prepared to fend off U.S. pressure not to rush into any deals with Iran.

India and Iran agreed in 2003 to develop a port at Chabahar on the Gulf of Oman, near Iran’s border with Pakistan, but the venture has made little progress because of Western sanctions on Iran.

Now, spurred on by Chinese President Xi Jinping’s signing of energy and infrastructure agreements with Pakistan worth $46 billion, Modi wants to swiftly sign trade deals with Iran and other Gulf countries.

“Shipping Minister Nitin Gadkari will travel on a day-long tour to Iran to sign a memorandum of understanding for development of Chabahar port,” a shipping ministry source with direct knowledge of the matter told Reuters. The deal will be signed on Wednesday, he said.

Encouraged by the prospect of a deal between world powers and Tehran by June 30 on Iran’s nuclear program, after which sanctions could be eased, India recently sent a delegation to Iran to scout for trade, energy and infrastructure deals.

The United States cautioned India and others last week against strengthening ties with Iran ahead of a final agreement. But Indian officials said New Delhi could not ignore its national interest and noted a report that a U.S. energy delegation was visiting Iran.

“We don’t want to miss this opportunity and will move as expeditiously as possible,” the shipping ministry source said. India’s cabinet approved the plan to develop Chabahar port last year.

Iran has also proposed a free-trade agreement with India, a trade ministry source said. Rupee-denominated trade with Iran, started in 2012 because of complications arising from sanctions, has almost doubled Indian exports to Tehran in the past two years to $4 billion.

Now Indian exporters want to build on that, using a free-trade zone being developed near Chabahar to export more to the Commonwealth of Independent States, made up of former Soviet Republics, said Mumbai-based Khalid Khan, regional head of the Federation of Indian Export Organisations.

“It will be Modi’s gift to Iran and Indian exporters,” he said of the port project.

BYPASSING PAKISTAN

India wants to build the port as it would cut transport costs and freight time to Central Asia and the Gulf by about a third.

The port is also central to India’s efforts to circumvent Pakistan and open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.

India has already spent about $100 million to construct a 220-km (140-mile) road in western Afghanistan to link up with Chabahar port.

Last week Modi assured Afghan President Ashraf Ghani of India’s commitment to building the port.

Chabahar is just along the coast from Gwadar port in Pakistan that is being developed with China’s help, said Robin Mills, head of consulting at Dubai-based Manaar Energy. “So there is a strategic element for the Indian side”.

Iran could rapidly develop as a destination for global investors if Western sanctions are lifted and Modi wants to fast-track the port project before Tehran has time to rethink.

At the weekend, Iranian media reported that Iran had turned down an Indian request seeking multi-billion-dollar development rights for the Farzad B gas field.

“I think India should try to push ahead and take advantage wherever they can before Iran changes its mind,” Mills said.

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Reader Comments (16)

  • Syed Ahmed
    May 5, 2015 - 7:13PM

    lol… they are only in a rush to spite Pakistan, everything India does is in reaction to Pakistan, However Pakistan should proceeed at its pace as it has the strategic geographical advantage that cannot be matched by Chabahar. India will still need to ship goods while Pakistani port will give lightening fast access via road to Afghanistan and CIS and to CIS via China…

    Just move along Pakistan, let Modi burn in his hatred. He is a petty and small man.Recommend

  • Vectra
    May 5, 2015 - 9:43PM

    @Syed Ahmed:
    No the opposite is true,it is not Chabahar that cannot match Gwader but it is Gwader that cannot match Chabahar due to Iran geographically more close to Arab states and Strait of Hormuz and its influence is more than pakistan in international level.Recommend

  • Raja Porus
    May 5, 2015 - 11:21PM

    We wish the best of luck to the Indians, they are generally very petty people, and highly jealous in nature. They cannot stand anyone else succeeding. Whereas Pakistanis are big-hearted, and larger than life. The petty Indians can take the long route to Afghanistan and CIS, while we shall enjoy the short route;) Enjoy, you BJP Hindu fundamentalist jealous fools!Recommend

  • ahmed wani
    May 6, 2015 - 12:06AM

    india building port…china building port…..where does pakistan come in between…competition is between two infrastructure developing countries..not strategic asset manufacturers…..Recommend

  • UM
    May 6, 2015 - 1:13AM

    @Vectra:
    No you are wrong, India does not need to bypass Pakistan for access to Arab states it needs access to Afghanistan and Central Asia and besides any ship entering Gulf of Oman Chabahar port) will have to pass through Gawadar.Recommend

  • Khattak
    May 6, 2015 - 3:25AM

    Afghanistan has suffered & been blackmailed for too long. Though they have shifted most of the container trade(80%) to bander Abbas from Karachi but Chabahar will be a welcome addition. Thanks to China & India they are doing the right thing by developing roads & ports.Recommend

  • lol
    May 6, 2015 - 4:00AM

    Comedy comments from pakistanis aside, they should really learn to comprehend the article posted on their own site before commenting on it. Just an advice, kinda like you should comprehend the deals you make with china, which is buying your country. :)Recommend

  • Another Indian
    May 6, 2015 - 4:02AM

    @Raja, is that the reason why Pakistan is lauded by the world as the epitome of industrial and human development, secularism and human especially women’s rights?Recommend

  • Asad Khan
    May 6, 2015 - 6:34AM

    fend off U.S. pressure

    Wow, look who is talking

    Some times I have to laugh with irony that Reuters has become nothing but a PR Firm for India. Every news item which originates from India must contain a twist of Indian Initiative or grandeur. Day by day Reuters India bureau is blowing its credibility.

    The Knowledgeable folks knew very well that India & Iran (like IPI Pipeline) in glamour announced construct a port in 2003. Till that time more 10 years has lapsed not India was unable to fulfill her bargain to construct the port, India ran away from IPI project is well known.

    Now even Farzad B Gas Field (which Iran literally offered to India almost in a plate) which Iran was offering two years back is now off the table.

    @Vectra:

    No the opposite is true,it is not Chabahar that cannot match Gwadar but it is Gwader that cannot match Chabahar due to Iran geographically more close to Arab states and Strait of Hormuz and its influence is more than pakistan in international level.

    Gwadar has no peer in the entire region my friend. Chahbhar has small approach channel, it connects nothing but Afghanistan, it potential starts & ends in Afghanistan. It is strategic importance is more military that economical cuz its gives Iranian navy to avoid choke hold of strait of Hormuz.

    regards,Recommend

  • someone
    May 6, 2015 - 8:54AM

    @Asad Khan:
    Well India can fend off US pressure when it needs to. India and China were the only country buying Iranian Oil even with US sanctions. Pakistan on the other hand is still waiting for US green signal to build the pipeline for which Iran has completed its entire work. It is Iran’s generosity that it is not asking for hefty penalties from Pakistab, which is 1 million dollar a day. Now lets see Why India backed out of IPI. Well , India wanted to pay the price of the gas reaching India’s doorstep. Iran wanted to charge for the gas leaving its door step and Pakistan could not guarantee the security of the pipeline which means India could have ended up paying for the gas not reaching it’s shores so in nutshell, it was Pakistan who became a choking point in the whole deal. Recommend

  • Dan
    May 6, 2015 - 12:10PM

    @ Raja Porus:

    At least India is building ports, roads, developing infra and investing in countries such as Afghanistan & Iran all by herself, what is Pakistan doing?? Zero! , Nothing!!! All you people do is just boast of what Chinese are doing and what they are developing. Why? Where is the pride in that? Or you people have accepted that Pakistan is a colony of China? Yes, you might say that China is a friend of Pakistan so we feel proud. But the Fact is China is just using Pakistan for her benefits only!! As a sovereign nation Pakistan is doing nothing. On the other hand India is trying to develop South Asia by helping other friendly countries, by developing and investing in infra and its a win-win situation for all the parties involved. Try to give credit where its due. India would not have developed Chabahar Port, had Pakistan given India permission to use its territory to export goods to Central Asia and vice- versa. India was forced to think about another way out.
    Also, Pakistan does not have the capability and funds to invest in other countries, forget about building roads, bridges buildings, hospitals and other infras.We are not jealous fools, actually its the other way around.Recommend

  • Vectra
    May 6, 2015 - 2:24PM

    @UM:
    Yes India does not need Pakistan for access to Arab states where pakistan has totally no option and control as Indian Navy dominated Arabian sea and Indian Ocean,but accessing to Afganistan and Central Asia pakistan has only single option of blocking India through land route in its territory while India has double and alternative option of reaching its destination i.e one through pakistan which it denies hence India’s 2nd option comes to play.India is at advantage compared to pakistan in accessing this particular issue of accessing to Afganistan and Central Asia is concerned.Now as far as any ship entering Gulf of Oman or Chabahar port is concerned they dont need Gwader to stop and they never will but yes they will PASS BY Gwader not PASS THROUGH Gawadar as said by you.So Gwader has zero significance.The dream of having booming port is helpful for those countries who themselves are manufacturing (export) powerhouses but pakistan has none.So you are wrong.Recommend

  • Shahg
    May 7, 2015 - 10:13AM

    @Vectra:
    then why are you here? obviously it bothers you, I will never go to an Indian site, I cant stand Indians and I have pride…do you have any pride?Recommend

  • bashah
    Jun 4, 2015 - 10:45PM

    i can’t understand the indian double standards when they are regularly boasting by saying that they are not interested in engaging pakistan or don’t give importance to pakistan point of view. but when it comes to any news on any pakistani site, it is heavily swarmed by indians by constantly realizing their presence and spewing their inherited venom against pakistan…i ask you indians..what and how much you have achieved so far through this hate mongering approach???……no harsh and hard feelings for you indians…believe me.Recommend

  • ron
    Jun 4, 2015 - 11:46PM

    India started chhabar in 2003 way before gwadar was even known and is now more interested than ever because Iran will no more be covered under US sanctions, this is in no way related to 46 billion poured in by China in the begging bowl of Pakistan.Pakistan wanted Turkey to invest more than 5 billion but it hasn’t even invested 1 billion, in fact they have withdrawn their investment as per the latest reports because of the state sponsored terrorists of Pakistan.
    Pakistanis can hate Hindus all they want after all the country is created to hate and destroy humanity but it won’t help them attract investors.If Pakistan wants parity with India why doesn’t it go and build ports in foreign countries and trade with them instead of hating on the ones that do, oh right that requires money and brains, things which are required to build and not destroyRecommend

  • Meet
    Jun 5, 2015 - 7:45AM

    @bashah: Well I believe the website here in question can block all Indians but they won’t, and how it should be, I know there is hatred on both sides but news shown reelated to India are in much more quantity than what indian newspapers show in relation to pakistan, when you are blasting and ridiculing India we ought to defend here, as far as this news is concerned, every nation has a right to prolong it’s interests, if pakis are so big hearted they would have never ever stopped indian access to Afghanistan, all this non sense of anti pakistan materials being supplied to Afghanistan doesn’t hold since India could well do it via planes, why risk it through pakistan, chabahar deal was done in 2003, it’s being built by Indians, how that can be related to pakistan gwadar port, which is being built by Chinese, it’s about China and India, pakistan doesn’t even come in picture, you are just surrendering your dignity yet again to a foreign power, keep dreaming, it’s China that will consume you this time again Recommend

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