Why Iran dropped India from Chabahar rail project?

Why Iran dropped India from Chabahar rail project?

Government of Iran has decided to drop India from the Chabahar Port – Zahedan Rail Project, mentioning delays from India in starting and funding the project.

♦Where is Chabahar Port located?

  • Chabahar Port is located in the South-eastern region of Iran on the Gulf of Oman.
  • Chabahar port serves as Iran’s only oceanic port.
  • It has two separate ports: Shahid Kalantari and Shahid Beheshti.

♦Chabahar Rail Project

  • In 2016, India signed an agreement with Iran to construct a rail line from Chabahar port to Zahedan, along the border with Afghanistan. During the 2016 visit of PM Modi to Iran, an MoU was signed between Indian Railways Construction Ltd (IRCON) and Iranian Railways for this project.
  • This Rail Project was supposed to be a tri-lateral agreement between Iran, India and Afghanistan to build an alternate route for trade to Afghanistan and Central Asia.
  • Chabahar-Zahedan rail line is a 628 km rail line from Chabahar port to Zahedan, which will be extended to Zaranj across the border in Afghanistan.

♦What is the issue?

  • Mohammad Eslami, Transport and Urban Development Minister of Iran, has inaugurated the track-laying process of this rail line last week.
  • The Iranian government will now proceed with the construction of this rail line by themselves without the help of India.
  • The whole project would be completed by March 2022.
  • The Iranian Railways will use about USD 400 million from the Iranian National Development Fund (INDF) for this project.

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Why Iran dropped India from the project?

  • Iranian government mentioned that India delayed the funding and starting of the project.

In the past 4 years, engineers from Indian railway visited several sites but India never began the work, apparently due to worries that these could attract U.S. sanctions.

A sanctions waiver for the Chabahar port and the rail line to Zahedan had provided by the USA, but it has been difficult to find partners and equipment suppliers due to worries that they can be targeted by the USA.

  • India has already reduced its oil imports to zero from Iran due to USA sanctions.
  • Another reason behind this can be the 25-year, $400 billion strategic partnership deal between Iran and China. This partnership could result in the involvement of China in the Chabahar’s duty-free zone, an oil refinery nearby, and could be a larger involvement as well in Chabahar port.

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