India on track to make Chabahar preferred port of call in Iran for trade with Central Asian nations, says shipping secy

The recent tension in West Asia, marked by the Iran-Israel conflict and US bombings has prompted India to fast-track its plan to develop rail and road infrastructure at Chabahar port. This would turn it into the preferred port of call for the movement of all Indian goods destined for Central Asian countries and Afghanistan and reduce dependence on Bandar Abbas.

Chabahar not only provides India with an alternative access point to Central Asia and Afghanistan, it also bypasses both Pakistan and the China-Pakistan Economic Corridor (CPEC). This offers India greater regional connectivity and trade options, reducing its reliance on Pakistan and potentially strengthening its geopolitical influence in the region.

“Work on improving and expanding facilities at Chabahar Port is ongoing and the port has also been consistently getting increased container and cargo at its terminal. Very soon, the port will get connected to main rail and road networks in Iran allowing it to become the prime port for movement of shipments from India to Iran, Afghanistan and other Central Asian Republics," Ramachandran told Mint.

He said the port did not face any threat during Israel-Iran conflict and functioned normally with all construction work, including expansion and connectivity projects, continuing uninterrupted.

“The objective for Chabahar Port is to make it the main port of call for Indian shipments bound for Central Asian republics and we are moving in that direction," Ramachandran said.

Bandar Abbas key port now

At present, Indian shipments to Iran and Central Asian countries mainly use Bandar Abbas, Iran’s largest port. But rising tensions in West Asia and the Persian Gulf region pose threat to this port that is close to Strait of Hormuz, a famous chokepoint. In recent days the threat of Iran closing off the Strait of Hormuz has loomed large. A closure would have made shipments in and out of Persian Gulf difficult and spiked oil prices.

Chabahar, is away from the Strait of Hormuz and has a vast opening towards the Arabian Sea. This makes the port not only strategically important for India but also one that supports uninterrupted shipments even during times of tension in West Asia.

India’s focus on projects in Iran also assumes importance in wake of worsening India-Pakistan ties following the April terrorist attack on tourists in Pahalgam.

“Indian and Iranian authorities are working to provide rail connectivity to the port and the infrastructure should be available soon," Ramachandran said.

As per the plan, India along with Iran would fast-track the development of a new rail route between the Chabahar port and Zahedan city. This could turn the port into the gateway to the International North–South Transport Corridor (INSTC), providing the main trade channel for Central Asian and Eurasian countries located on the eastern side of the Caspian sea and Afghanistan. The rail line is expected to be ready by 2026-end or early 2027.

Also read | India to fast-track Chabahar port works

The rush for rail connectivity is because port operations have now become viable with a pick-up in movement of both container and dry bulk cargo as Chabahar becomes the main trading channel for India.

Chabahar, as per the ministry of ports, shipping and waterways (MoPSW), handled a substantial volume of cargo in FY25, reaching up to 80,000 TEUs and 3 million tonnes of bulk cargo. In comparison, it had managed just over 64,000 TEUs in FY24 and only around 9,000 TEUs the year before that. The port handled 2.12mt of bulk cargo in FY24 and 2.08 mt in FY23.

A TEU is a measure of volume in units of twenty-foot long containers.

The port has a current capacity of 100,000 TEUs which will rise to 500,000 TEUs over the next few years The bulk cargo capacity of 8mt will be more than doubled soon.

Work on the 700-km long Chabahar-Zahedan railway line has moved very slowly even though an MoU was signed between Indian Railways’ IRCON and Iranian Railways’ Construction and Development of Transportation Infrastructures Company (CDTIC) back in 2016. Now, it is getting implemented as Chabahar is emerging as next big commercial port in Iran after Bandar Abbas.

Taking shape

Things began to take shape when India and Iran in May last year signed a long-term contract for the development of Chabahar port after years of protracted negotiations. IPGL (India Ports Global Ltd) has taken over operations of Shahid Beheshti terminals at Chabahar.

The facility. which comprises a container terminal and a multi-cargo berth, is operational and providing services for bulk and container cargo. A number of schemes are being offered by IPGL to promote the use of Chabahar port including, discounts, longer free storage times for cargo etc.

The port has a deep draft that can handle larger vessels. Besides, ships calling at Chabahar avoid traffic congestion and waiting time at anchorage, being outside the Strait of Hormuz. The road to Zahedan (Iran) and onwards to Zaranj (Afghanistan) also provides seamless connectivity for movement of humanitarian aid from India to Afghanistan through Chabahar port.

The Port handles a diverse range of products such as automobile spare parts, agricultural products, iron ore, clinkers etc. and efforts are on to increase the product basket handled at the port.

Also read | After Chabahar, India looks to build port facilities in Bangladesh and Sri Lanka

The port's integration with a special free zone is another positive, while Indian incentives, such as concessions on vessel and cargo charges, bolster trade flows through Chabahar.

In 2003, India agreed to help Iran develop the port as well as accompanying infrastructure links during then President Mohammad Khatami’s visit to India. However, matters progressed slowly thereafter amid western sanctions.

In 2013, India committed to providing $100 million for the development of Chabahar. An MoU) was signed in May 2015. Thereafter things appeared to be moving forward during the visit of Prime Minister Narendra Modi to Iran in 2016. But Indian plans to help develop an international trade corridor, which included Chabahar as a central transit point, stalled again due to the reimposition of western sanctions against Iran for its nuclear programme.

Enhancing regional connectivity

This present agreement aims to enhance regional connectivity and facilitate trade, particularly between India, Iran and Afghanistan. The India Ports Global Chabahar Free Zone (IPGCFZ), a subsidiary of IPGL, facilitated the first consignment of exports from Afghanistan to India in 2019.

The operations continued through short-term contracts while negotiations on a long-term agreement picked pace with the visit of MoPSW minister Sarbananda Sonowal to Chabahar in August, 2022.

Also read | India, Iran may restart rail connectivity project between Chabahar and Zahedan

Negotiations on the long-term contract were held up over disagreements on arbitration clauses. Mint had earlier reported that the two sides have reached an accommodation which will allow arbitration under rules framed by the UN Commission on International Trade Law.

India is looking to strengthen its presence in key infrastructure along the route passing through the Persian Gulf region. The Adani Group is already operating the Haifa port in Israel and more port deals are expected in the region by Indian entities that will strengthen the country's presence on this strategic route that is the main gateway for shipments moving from the India to Europe.