Syllabus: GS2/ International relations
Context
- The US government is currently reviewing the sanctions waiver granted to India for the Chabahar Port project, which could impact India’s connectivity plans with Central Asia.
Background
- The United States has imposed multiple rounds of sanctions on Iran, primarily targeting its nuclear program and economic activities.
- US Sanctions Waiver for Chabahar: The US granted a waiver for India’s involvement in Chabahar. The key aspects of the waiver include:
- First Waiver: In 2018 the US exempted India from sanctions related to Chabahar, acknowledging its humanitarian and regional connectivity benefits.
- Renewed Waiver: Further exemptions were granted, ensuring continued Indian operations at the Shahid Beheshti Terminal and related connectivity projects.
Impact of US Sanctions on India
- Potential Disruption in Development: The new US directive restricts India’s ability to continue its operations at Chabahar port.
- Despite US sanctions on Iran, India continues to import oil from Russia amid growing global pressure.
- Effect on Trade and Connectivity: Since 2018, the port has handled over 90,000 TEUs (twenty-foot equivalent unit) of container traffic and more than 8.4 million metric tons of cargo.
- Any sanctions will hinder further progress.
- Declining Trade with Iran: The earlier sanctions have led to a significant decline in India’s trade with Iran.
- In 2018-19, India’s imports from Iran were worth $13 billion, primarily crude oil. However, post-2019, imports fell to less than $1 billion annually.
| Chabahar Port – Iran’s Chabahar port is located on the Gulf of Oman and is the only oceanic port of the country. 1. It is situated in the city of Chabahar in Sistan and Baluchestan Province. – Chabahar has two ports; Shahid Kalantari and Shahid Beheshti. 1. The former is an old port with limited water front to accommodate feeder vessels. 2. The Shahid Beheshti Port is being developed in four phases. On completion of all 4 phases, port capacity will be 82 million tons per year. |
Significance of Chabahar Port for India
- Strategic Importance: The Chabahar port provides India with a direct trade route to Afghanistan and Central Asia, bypassing Pakistan.
- It strengthens India’s regional presence and offers an alternative to China’s Belt and Road Initiative.
- Economic Benefits: The port facilitates trade through the International North-South Transport Corridor (INSTC), reducing transport costs and time.
- The Economic Survey 2024-25 reported a 43% increase in vessel traffic and a 34% rise in container traffic at the Shahid Beheshti Terminal.
- India’s Investment: Under the 2024 agreement, India Ports Global Ltd (IPGL) has committed $120 million to equip the port. Additionally, India has extended a $250 million credit facility for infrastructure development linked to Chabahar.
Way Ahead
- India has balanced its strategic relations with both the US and Iran, but the potential revocation of the Chabahar waiver poses a diplomatic challenge.
- Due to its regional importance, India’s continued investment in Chabahar is essential for its long-term connectivity and economic interests in Central Asia and Afghanistan.
- The development of Chabahar port remains crucial for India’s foreign policy and regional outreach, requiring careful diplomatic negotiations with both the US and Iran.
Source: ET
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