The Hindu Editorial Analysis- 25th May 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

The Missing Links in IMEC, as shown by the Gaza War

Why in News?

Recently, India and Iran signed a 10-year contract for operating the Chabahar port in Iran.

• This long-term agreement was signed between Indian Ports Global Ltd. (IPGL) and Port and Maritime Organisation (PMO) of Iran, enabling operation of the Shahid-Beheshti terminal.
• Signing of a long-term contract with Iran is part of India’s strategic and economic vision for Central Asia and beyond.

Why is Chabahar Port Important for India?

Chabahar Port Overview:

• Location: Sistan and Baluchistan Province, Iran, on the Makran coast, Gulf of Oman.
• Components: Shahid Kalantari Port and Shahid Beheshti Port.

India's Involvement:

• Project Offer: Iran offered India the development of the Shahid Beheshti port.
• MoU Signed: In May 2015, India signed a memorandum of understanding (MoU) for the port's development.

Trilateral Agreement:

• Chabahar Agreement: Signed in May 2016 by India, Iran, and Afghanistan to establish the International Transport and Transit Corridor.
• Objective: Enhance transportation and trade connectivity using Chabahar as a key transit point.

Challenges and Resolution:

• Delays: Finalising the long-term agreement was delayed due to disputes over specific clauses.
• Arbitration Dispute: India wanted arbitration in a neutral country, while Iran preferred its own courts.
• Compromise Reached: Both parties agreed on a compromise for dispute resolution through communication and cooperation.

New Agreement:

• Duration: The new long-term agreement spans 10 years with provisions for automatic renewal.

Significance of Chabahar Port:

Alternative Trade Route:

• Dependency on Pakistan: Historically, India's access to Afghanistan and Central Asia relied on transit through Pakistan.
• Chabahar Port: Offers an alternative route bypassing Pakistan, reducing India's dependence on Pakistan for trade with Afghanistan and beyond.
• Gateway to INSTC: Enhances India's access to Iran, a key gateway to the International North-South Transport Corridor (INSTC) connecting India, Iran, Russia, Central Asia, and Europe.

Economic Benefits:

• Enhanced Connections: Chabahar will boost India's connections with Central Asian countries and Afghanistan.
• Diversified Trading Routes: Allows India to diversify routes, improving access to markets in Russia, Eurasia, and Europe.
• Cost and Time Savings: Cargo movement via INSTC is expected to save 30% in costs and 40% in transportation time, offering quick and competitive turnaround.
• Central Asian Interest: Landlocked Central Asian nations like Kazakhstan and Uzbekistan are interested in using Chabahar to connect to the Indian Ocean and Indian market.

Humanitarian Assistance:

• Entry Point: Chabahar Port can be a crucial entry point for humanitarian aid and reconstruction efforts in Afghanistan.
• Covid-19 Pandemic: Played a vital role in supplying humanitarian aid during the pandemic.
• Aid Examples: 2.5 million tonnes of wheat and 2,000 tonnes of pulses trans-shipped from India to Afghanistan; in 2021, India sent 40,000 liters of malathion to Iran through Chabahar to combat locust attacks.

Strategic Influence and Regional Stability:

• Geopolitical Position: Enhances India's strategic influence in the Indian Ocean region, strengthening its geopolitical stance.
• Counter to Gwadar: Acts as a counter to China’s development of Gwadar port in Pakistan.
• Defense and Piracy: Chabahar's docking facilities allow India to respond to sea piracy and act as a first line of defense in the Arabian Sea.

What are the Challenges in Realising Potential of Chabahar Port?

What is the Status of Economic Ties Between India and Iran?

India-Iran Bilateral Trade (FY 2022-23):

• Total Trade Value: USD 2.33 billion, with a year-on-year growth of 21.76%.
• Exports to Iran: USD 1.66 billion.
• Imports from Iran: USD 672.12 million.
• Trade Decrease: Total trade decreased by 23.32% compared to the previous year.

Export and Import Details:

• India's Exports to Iran:  Meat, milk products, onions, garlic, and canned vegetables.
• India's Imports from Iran:: Methyl alcohol, petroleum bitumen, liquified butanes, apples, liquified propane, dates, and almonds.

Foreign Direct Investment (FDI): Recorded at just USD 1 million from April 2000 to December 2023.

Oil Imports: India does not import Iranian oil due to US sanctions on Tehran.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Prelims

Q. What is the importance of developing Chabahar Port by India? (2017)

(a) India’s trade with African countries will enormously increase.

(b) India’s relations with oil-producing Arab countries will be strengthened.

(c) India will not depend on Pakistan for access to Afghanistan and Central Asia.

(d) Pakistan will facilitate and protect the installation of a gas pipeline between Iraq and India.

Ans: (c)