Iran may link Chabahar port with Central Asian corridors
BY DIPANJAN ROY CHAUDHURY, ET BUREAU | JUN 09, 2017, 01.12 AM ISTPost a Comment
ET has learnt that Tehran has offered Delhi management rights for two years for phase one of the port and such rights could be renewed by another decade.
ET has learnt that Tehran has offered Delhi management rights for two years for phase one of the port and such rights could be renewed by another decade.
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NEW DELHI: The key Iranian port of Chabahar where India has a key stake is not only being expanded as a gateway to Afghanistan but also being considered as an entry point to Central Asia following Hassan Rouhani’s re-election as the Iranian President.
Tehran is considering a plan to link the strategically-located Chabahar port with various intra-Central Asia transport corridors. Chabahar currently connects India with Afghanistan through road and plans are on by Tehran to build rail link with Delhi’s support.
The Rouhani government’s plan to also link Chabahar with various Central Asian transport corridors will open up a second route for India’s outreach to landlocked Central Asia apart from International North-South Transportation Corridor (INSTC) that also passes through Iran.
The subject among other bilateral issues may come up for discussion if Rouhani meets Prime Minister Narendra Modi for a pull aside on the sidelines of the Shanghai Cooperation Organisation (SCO) Summit in Astana on Friday. No structured meeting between the Iranian President and the Indian PM is on the cards in Astana so far.
India has been among the first countries to condemn terror attack in Tehran on Wednesday when Foreign Minister Sushma Swaraj telephoned her Iranian counterpart.
India too has been considering to link INSTC with various intra-Central Asian connectivity corridors besides making Chabahar port another entry point for INSTC. Currently, the Iranian port of Bandar Abbas is the entry point for INSTC that will link India with Russia, Eurasia and Europe.
On Monday, Swaraj denounced misgivings regarding delay in India’s role in expanding Chabahar port and asserted that work on the project has gathered momentum.
“Iran for centuries has been the hub for connectivity links for countries of Asia and Europe, including India. Connectivity is one of the key strengths of Iran and President Rouhani is keen to boost all connectivity initiatives through the country.
This is a priority sector for Iran and India’s role is vital in the connectivity initiatives. Chabahar will not only be gateway to Afghanistan but the plan is to also make it a gateway to Central Asia,” a top official of the Iranian government told ET.
The Chabahar port project was discussed during Foreign Secretary S Jaishankar’s visit to Tehran last month. Tehran has offered Delhi a proposal to manage phase one of the port built by Iran even as the two sides are still negotiating terms and conditions of Delhi's role in expanding phase two of the port where the Modi government has announced to invest Rs 150 crore or $235 million.
ET has learnt that Tehran has offered Delhi management rights for two years for phase one of the port and such rights could be renewed by another decade.
India’s allotment of $235 million for phase two of Chabahar is divided into two parts — $150-million Line of Credit (LoC) from the EXIM Bank for development of the port complex and $85 million allotted later following contract between the two sides for the supply of equipment to develop two berths in the port complex.
A special purpose vehicle has been created by the Indian shipping ministry for development of phase two of the port. On the Iranian side, Ports and Management Organisation is the nodal authority for implementing the project.
India has been given the rights to operate two berths and few terminals in this phase two of the port. India is eyeing thriving free-trade zone in Chabahar to make the port viable, indicated a person familiar with the development.
http://economictimes.indiatimes.com...tral-asian-corridors/articleshow/59060361.cms
India says Chabahar plan on track despite odds
Sat Jun 10, 2017 10:41AM
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A public park in Chabahar. India is developing the Iranian port under an ambitious connectivity initiative.
India says its development of the Iranian port of Chabahar as part of its ambitious bid to access Central Asia and Afghanistan is on track despite problems in procuring equipment from Western manufacturers.
The Indian government has committed $500 million to Chabahar which lies on the Gulf of Oman, aiming to join an increasingly important transport corridor to the resource-rich regional countries.
Massive investment plans are already on the cards, with the government of Prime Minister Narendra Modi offering to build a sprawling artery of roads and railways which is estimated to cost $15 billion.
When development is complete, Chabahar will link with the International North-South Transportation Corridor (INSTC) which is currently stretches from the Iranian port of Bandar Abbas in the Persian Gulf to Russia, Eurasia and Europe.
Indian Foreign Minister Sushma Swaraj asserted on Monday that work on the project has gathered momentum despite misgivings about delay in New Delhi’s role.
“Iran for centuries has been the hub for connectivity links for countries of Asia and Europe, including India. Connectivity is one of the key strengths of Iran and President Rouhani is keen to boost all connectivity initiatives through the country,” he was quoted as saying.
His reassuring words come in the midst of disparaging reports, claiming that India’s biggest overseas infrastructure push was being derailed in the face of trade complexities with Iran.
On Friday, Reuters said Western manufacturers were shying away from supplying equipment for Chabahar because they were fearful of possible US sanctions.
The news agency cited Swiss and Finnish engineering groups having told Indian developers that they were unable to supply equipment such as cranes and forklifts because their banks were not ready to facilitate transactions involving Iran.
One Indian official, however, said China’s ZPMC has come forward to supply equipment for developing jetties and container terminals.
An aerial view of the Iranian port of Chabahar
India’s ambassador to Tehran, meanwhile, brushed aside the report, saying the process of equipment for the Chabahar port was under way.
Saurabh Kumar said some of the customized cranes needed in Chabahar take up to 20 months to build, adding the banking situation was also improving.
The ambassador also dismissed allegations that some tenders for supply of equipment had been floated three times because they failed to attract bidders.
“Tenders are re-floated for a variety of reasons including technical specifications not being met, etc. Banking channels, in recent months, have in fact somewhat eased,” he said.
“If some companies do not participate, it really is their business,” Kumar added.
Chabahar has strategic significance for India but some of the complications in trade with Iran are related to uncertainty over US policy, especially under President Donald Trump who has denounced a nuclear accord with Tehran as “the worst deal ever negotiated”.
While the US administration extended relief on some of US sanctions last month, it pledged to carry out an overall review of how to deal with the Islamic Republic.
Nevertheless, a top Iranian government official said the Chabahar project is a priority sector for Iran and India’s role is vital in the connectivity initiatives.
“Chabahar will not only be a gateway to Afghanistan but the plan is also to make it a gateway to Central Asia,” India’s Economic Times quoted the official as saying.
http://www.presstv.ir/Detail/2017/06/10/524820/Iran-port-development-Chabahar-India-investment
Good News for India as North-South Trade Corridor Takes Shape
India’s preferred alternative to China’s Belt and Road Initiative has seen progress in the past months.
By Roshan Iyer
June 10, 2017
From June 1 to 3, 2017, Indian Prime Minister Narendra Modi made his third trip to Russia, marking 70 years of India-Russia relations. One of the highlights on the economic front was the joint address by Modi and Russian President Vladmir Putin at the St Petersburg International Economic Forum (SPIEF), popularly known as the Davos of Eurasia.
Modi’s visit, just 15 days after China’s Belt and Road Initiative (BRI) Forum, which India did not participate in, holds significance for the International North-South Trade Corridor (INSTC), which would connect India, Iran, and Russia through Central Asia. Three days after the BRI Forum, various stakeholders from the diplomatic, civil society, and business communities came together for
an INSTC conference at India’s Foreign Service Institute in New Delhi. At the conference, the main issues were finalization of the INSTC routes and the development and optimal utilization of the Chabahar port in Iran to complement INSTC.
India and the Eurasian Economic Union
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Other than geopolitical significance, the geoeconomic importance of the INSTC is based on the fact that, amidst declining trade values, India and Russia have pledged to
ramp up trade to $30 billion over the next 10 years. This is no doubt extremely optimistic as bilateral trade between India and the entire Eurasian Economic Union (the EEU, consisting of Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan) was merely $8.4 billion in 2015-2016.
However, this pledge was buttressed by a
strong Indian presence at SPIEF. It has been noted in the past by Gleb Ivashentsov, a former Russian diplomat, that there is
a lack of information on Indian markets for Russian enterprises. If the Modi government wants to get the most out of the
EEU free-trade agreement it is pushing for, India must demonstrate a strong and continuous engagement with the private sectors of the EEU countries.
Here, it is important to note that all countries of the EEU are enthusiastic supporters of the BRI.
Putin’s statement at the BRI Forum is to be noted:
It is important that all integration structures – both existing in Eurasia and newly formed – would rely on universal internationally recognized rules, and, of course, take into account the specific features of the national models of development of the participating states, act openly and transparently.
Unlike the BRI, which consists mainly of bilateral trade agreements between China and the respective countries involved, the INSTC promotes multilateral actions through consensual decisions made by all the countries involved.
INSTC map via Wikimedia Commons/ Zbk1
Bridging Geopolitics with Good Economics
It must be noted that none of the countries along the INSTC have the economic wherewithal to shoulder projects that are commercially unviable. As
Ritika Passi of Observer Research Foundation notes, “the INSTC should be nurtured as a commercial project and the focus should be on reaping its economic advantages.” And those advantages could be substantial:
a much-discussed study by the Freight Forwarder Associations of India concluded that implementation of the INSTC will reduce trade costs by
30 percent and distances by 40 percent compared to the existing routes, which involve routing goods through Rotterdam Port in the Netherlands.
However, intra-INSTC trade is certainly not of significant volumes at present. The imbalance of trade leads to
a unique issue where there is a surplus of empty containers accumulating at one end and a shortage of available empty containers for shipping at the other. To this end, India’s engagement at SPIEF is the first step to connecting the grouping’s markets to generate sufficient trade volumes in both directions. The promotion of EEU products in the domestic Indian market would be another welcome strategy.
On the regulatory front of the INSTC there has been some progress. On March 6, India
acceded to the TIRConvention, a multilateral framework designed to facilitate container trade across borders with minimum hassles along the way. After India’s accession, all INSTC countries, except Oman, are party to the TIR Convention. Another positive sign was the
establishment of a “Green Corridor” between India and Russia, which would allow enterprises that are party to the agreement to bypass regular customs process when transporting goods along the route.
However, on the technical front, problems involving the multi-modal nature of transport along the corridor require a greater focus. In particular, there’s the issue of the varying types of railway gauges used by INSTC countries, preventing the smooth movement of freight along the corridor. With the incoming BRI rail infrastructure, which is likely to follow China’s smaller railway gauge, this is only going to complicate the INSTC’s mismatching gauge issue further.
The Way Forward
During the BRI Forum, the EU decided not to support a statement prepared by Beijing about trade,
citing transparency concerns. On the other hand, a lack of transparency is unlikely to be a problem to the nations involved in the INSTC. Additionally, European businesses have
shown an interest in the INSTC to promote trade with the region. However, the role of Iran as one of major hubs of the INSTC is a concern on a geopolitical level, especially given the danger of new sanctions under the present U.S. administration and the importance of private sector investment in the corridor.
Having said this, it is clear that the world does not view the INSTC with the same level of suspicion as they view the BRI. Regardless, the INSTC is hardly a contender to China’s mammoth BRI, and certainly it must not be viewed as such. Instead, the INSTC should try to leverage the connectivity gaps filled in by the BRI, especially in Central Asia. It is also important that the INSTC grouping not be weighed down by India’s heightened sense of rivalry with China. In the interest of promoting regional development in Central Asia, it would be ideal for both initiatives to pay heed to one another.
Roshan Iyer is a Research Assistant at CUTS International working on the regional integration of India’s neighborhood. The views expressed in this piece are personal.
http://thediplomat.com/2017/06/good-news-for-india-as-north-south-trade-corridor-takes-shape/
..at least it's better than nothing 
.
Don't be stupid to think you will block trade route of Iran, Russia, and effectively trade with KSA and UAE. 
