Iran drops India from Chabahar rail project, cites funding delay
14th July, 2020
Context:
The Iranian government has decided to proceed with the construction on a rail line from Chabahar port to Zahedan, along the border with Afghanistan on its own, citing delays from the Indian side in funding and starting the project.
Development:
Iranian minister inaugurated the project by himself.
The entire project would be completed by March 2022.
Iranian railways will proceed without the Indian investment.
Use approximately $400 million from the Iranian National Development Fund.
About the Project:
Part of commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.
Signed the MoU in 2016 under the Chabhar agreement.
The MoU was to construct the Chabahar-Zahedan railway as “part of transit and transportation corridor in trilateral agreement between India, Iran and Afghanistan.
IRCON, Indian company was to provide all services, superstructure work and financing for the project (around $1.6 billion).
Challenges:
India never began the work, fearing US sanctions.
However, US provided sanction waiver for the development of Chabahar Project and Railway line but it is difficult to find equipment suppliers and partners as they could be targeted by the U.S.
China is already finalising a 25 years deal.
Proposed Railway Line:
About Chabahar Port:
Agreement:
Signed in 2015 between India and Iran.
India was to develop the Chabahar Port.
Location of Chabahar Port:
Located in Gulf Of Oman.
Only Oceanic port of Iran..
Importance for India:
Enhanced trade with Afghanistan and Central Asia by bypassing the Afghanistan.
Access to the International North-South Transport Corridor that has sea, rail and road routes between India, Russia, Iran, Europe and Central Asia.
Counter Chinese Presence in Arabian Sea.
Significant boost in the import of iron ore, sugar and rice to India.
Establishment of sustainable connectivity with Afghanistan.
Point to coordinate humanitarian assistance across the Middle East.