 "India's Central Asia dreams to set sail from Chabahar")
Emerging from decades of sanctions, Iran could soon be the most happening place for trade in the near future, with all the major economies seeking to build ties with it. Modi reached Tehran on Sunday.
Leveraging historic ties with Iran, Modi signed deals covering a wide range of areas, from exchange visits by think tanks to a trilateral agreement between India, Afghanistan and Iran for a trade treaty to develop the Chabahar port. It is Iran’s only port on the Indian Ocean, and once developed, it will allow India to access Central Asia directly — skipping Pakistan.
The Ministry of External Affairs (MEA) later issued an official statement claiming that a decision has been reached to transform the trade relationship between the two countries into a comprehensive economic partnership. But even more significantly, putting past differences behind them, Iran and India said they were in political agreement.
“We have agreed to consult closely and regularly on combating threats of terrorism, radicalism, drug trafficking and cyber crime,” Modi said, addressing a joint press conference with Iranian President Hassan Rouhani.
Terming the dosti (friendship) between India and Iran as old as history, he said, “Through centuries, our societies have stayed connected through art and architecture, ideas and traditions, and culture and commerce. Expanded trade ties, deeper connectivity, including railways, partnerships in oil and gas sector, fertilisers, education and cultural sphere are driving our economic engagement.”
In the past at the United Nations on more than one occasion, India had opted to side with the United States against Iran, sparking disappointment. Talking about the trilateral transport and transit agreement with participation of Iran, Modi said, “It will open new routes for India, Iran and Afghanistan to connect among themselves. India and Iran also share a crucial stake in peace, stability and prosperity of the region.”
Union Road Transport and Highways and Shipping Minister Nitin Gadkari, who has accompanied the prime minister on his two-day trip, explained the importance of the Chabahar deal.
“The distance between Kandla (in the Kutch district of Gujarat) and the Chabahar port is less than the distance between New Delhi and Mumbai,” he said. “This agreement enables us quick movement of goods first to Iran and then onwards to Afghanistan and Russia through a new rail and road link.” The distance between Kandla and Chabahar is about 1,000 km; between Mumbai is 1,409 km southwest of New Delhi.
Gadkari added: “Investments of more than Rs 1 lakh crore can happen the Chabahar free trade zone.”
Iran has cheap natural gas and power that Indian firms are keen to tap into, to build a 0.5-million tonne aluminium smelter plant as well as urea manufacturing units, Gadkari said. “We spend Rs 45,000 crore annually on urea subsidy, and if we can manufacture it in the Chabahar free trade zone and move it through the port to Kandla and onward to hinterland, we can save that amount,” he said.
Gadkari said Nalco will set up the aluminium smelter while private and co-operative fertiliser firms are keen to build urea plants provided they get gas at less than $2 per mmBtu.
Railway-owned Ircon will build a rail line at Chabahar to move goods right up to Afghanistan.
India Ports Global, a joint venture of the Jawaharlal Nehru Port Trust and the Kandla Port Trust, will invest $85 million in developing two container berths with a length of 640 metres and three multi cargo berths. The Indian consortium has signed the port pact with Aria Bander Iranian.
“The contract is for 10 years and can be extended. We will take 18 months to complete phase one of the construction,” he said, adding that first two years of the contract are grace period where India doesn’t have to guarantee any cargo.
By signing the Chabahar agreement, India can take advantage of the agreement between Iran and China to build a rail link between the two countries, making Indian goods more marketable in the regions touched by the railroad. Politically, images of Afghanistan President Ashraf Ghani, who is less inclined towards India than his predecessor Hamid Karzai, and Iran President Hassan Rouhani shaking hands with Modi on a deal will have put the antennae up in Islamabad as well as Riyadh.
Rouhani’s March visit to Pakistan, the first by any Iranian President to Islamabad in 14 years, showed the rapidly changing status of Iran in the world. Modi for his part just concluded a visit to Saudi Arabia which is locked in a bitter conflict with Yemeni rebels that Riyadh alleges have been armed and backed by Iran. Modi signed a pact to develop and run Iran's strategic Chahbahar port to establish an international transport and transit corridor. India will be providing a sum of $500 million for the development of related infrastructure at the port.
"The bilateral agreement to develop the Chahbahar port and related infrastructure, and availability of about $500 million from India for this purpose, is an important milestone,” the Public Information Bureau release quoted Modi as saying. "We are committed to take steps for early implementation of the agreements signed today."
PM IN PERSIA
India signed 12 memoranda of understanding with Iran, including some important ones on the Chabahar Port:
Bilateral contract on Chabahar Port for port development and operations between India Ports Global Private Limited and Arya Banader of Iran
What it does: Development and operation for 10 years of two terminals and five berths with cargo handling capacities
EXIM Bank and Iran’s Ports and Maritime Organisation
What it does: To provide credit of $150 million for Chabahar port
Confirmation Statement between EXIM Bank and Central Bank of Iran
What it does: Confirms availability of credit up to Rs 3,000 crore for the import of steel rails and implementation of Chabahar port
Ircon and Construction, Development of Transport and Infrastructure Company, Iran
What it does: To enable Ircon provide services for the construction of Chabahar-Zahedan railway line (around $1.6 billion)
Cultural Exchange Programme
What it does: For 2016 to 2019, covering culture, art, radio, TV, mass media and cinema
Ministry of External Affairs and Iran’s Ministry of Foreign Affairs
What it does: Seeks to promote policy dialogue, encourage new mechanisms between think tanks
Foreign Service Institute, MEA, and the School of International Relations, Iran’s MoFA
What it does: To enhance cooperation for training of diplomats
Implementation Protocol between Department of Science and Technology, India, and Iran’s Ministry of Science, Research and Technology
What it does: Fleshes out the specifics of cooperation; covers areas like exchange of experiences, seminars, conferences etc.
Indian Council for Cultural Relations and Islamic Culture and Relations Organisations of Iran
What it does: Institutional mechanisms for cooperation and lays down modalities
Export Credit Guarantee Corporation Ltd, India, and Export Guarantee Fund, Iran
What it does: To establish a framework of cooperation in supporting and encouraging foreign trade and foreign investment and supply of goods and services to a third country
Nalco and the Iranian Mines and Mining Industries Development and Renovation Organization
What it does: To explore manufacturing aluminium by setting up a smelter on joint venture basis in Iran and/or entering into tolling arrangements with smelters in Iran or any other business, including sale of alumina, etc
Cooperation between the National Archives of India and the National Library and Archives Organisation of the Islamic Republic of Iran
What it does: To facilitate exchange of information and knowledge in archive through exchange of manuals, guidelines, rules, publications and other special literature