New Delhi and Tehran signed a 10-Year contract Monday in an effort to take the Chabahar Port project forward. This will boost the shipping industry in future and the stock related to shipping.
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India and Iran’s 10-year agreement to manage and expand the Chabahar Port, along with plans to link it with the International North South Transport Corridor (INSTC), has drawn attention from the US, potentially leading to sanctions. The Biden administration has imposed numerous sanctions on entities engaged in business with Iran, citing concerns over Tehran’s actions, including missile and drone attacks on Israel, which Iran claimed were in response to an Israeli airstrike in Syria.
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The Chabahar agreement carries notable geopolitical significance, particularly with China’s expanding presence in the region through initiatives like the Belt and Road Initiative (BRI). India’s engagement in Chabahar aligns with its strategic interests, offering access to Central Asia and serving as a counterbalance to China’s influence, notably with its investments in Pakistan’s Gwadar Port.
During the previous administration led by Donald Trump, the United States provided exemptions to several countries, including India, China, and Turkey, allowing them to continue development projects in Iran. This included the strategically significant Chabahar Port, which India was actively involved in, despite the US focusing on the port of Gulf of Oman due to its importance for Afghanistan.
The recent agreement between India Ports Global Limited (IPGL) and the Port & Maritime Organization of Iran builds upon previous efforts initiated since the original signing of the deal in May 2016. India’s investment of $85 million in developing the Shahid Beheshti Terminal at Chabahar Port underscores its commitment to the project, with further financial commitments expected from IPGL.
India’s involvement in Chabahar assumes greater significance given its loss of the Farzad-B gas field in the Persian Gulf due to pressure from the US. With the Belt and Road Initiative (BRI) expanding rapidly in Iran, India risks further erosion of its influence in the region. Additionally, in the initial phase, only public-sector companies are expected to be present in Chabahar.
While temporary exemptions were previously granted to certain countries by the US, including India, China, Italy, Greece, Japan, South Korea, Taiwan, and Turkey, allowing them to engage in business with Iran, the State Department reiterated that US sanctions on Iran remain in place, warning entities considering deals with Iran of potential risks and sanctions enforcement.