Port wars: India Lacks a Competitive Trade Strategy for Chabahar

[PDFChamp]

While the potential for Chabahar’s positive externalities remain numerous, they also remain largely hypothetical. The completion of the project does not necessarily guarantee an increase in Indian economic influence, considering the economic and political realities that Delhi presently faces on the domestic front and in the region. The competitiveness of Indian exports, the security situation in Afghanistan, and regional geopolitics pose several hurdles that India must overcome.

Domestically, India faces a slowing economy that has had six continuous quarters of decreasing growth.

In 2015, India exported a total of $950 million worth of goods to Central Asia compared to China’s $18 billion. Of the $950M, Afghanistan imported $560 million.


Figure 1: Statistics obtained from Organization of Economic Complexity (Iranian trade figures from 2007 are unavailable)

Current trade figures between Indian and Chinese exports to Iran and Russia further indicate the imperative for Delhi to develop a comprehensive trade strategy. In both Russia and Iran, the market share held by Chinese exports dwarfs those of India.


Figure 2: Statistics obtained from Organization of Economic Complexity

In 2005 and 2006, the gap between Indian and Chinese exports was marginal. Yet, this margin rapidly rose, with China’s market share in the Iranian economy coming to dwarf India’s. Indian exports reached their peak in 2013, standing at around $5 billion. A starker contrast is revealed when comparing the market share that Chinese exports hold in Russia compared to those of India. India must create a niche for its goods so that they can rival cheaper Chinese produced goods.


Figure 3: Figures obtained from Organization of Economic Complexity

Another major challenge that India must overcome deals with the security situation in Afghanistan that may complicate the success of the port. India must go through districts that are either under Taliban control (44 districts) or currently contested (117 districts).

The last major hurdle that India faces is navigating both the economic and geopolitical competition within the region. The port of Chabahar will have to compete with the joint Pakistani-Chinese port of Gwadar as well as the Iranian port of Bandar Abbas. China and Pakistan are unlikely to sit idle in the face of the massive investment that has taken place.

One final, final problem: Geo-politically, India’s investment in Iran seems to be counter to U.S. interests of peace with Iran; more US sanctions are on their way.

Read the full article: https://thediplomat.com/2018/01/india-lacks-a-competitive-trade-strategy-for-chabahar/

 

[randomradio]

The idea behind Chabahar is for India to create a link between India and Afghanistan. Everything else is planned through INSTC which may use all or Iran's ports.

It's up to Iran to make something of their port.

That "one final, final problem" isn't a problem. The US will look the other way because the port is being used for the advantage of India and Afghanistan primarily. Iran is simply a beneficiary of the project.

https://financialtribune.com/articles/domestic-economy/79897/iran-signs-2b-rail-deal-with-india
Iran Signs $2b Rail Deal With India

 

[PDFChamp]

The idea behind Chabahar is for India to create a link between India and Afghanistan. Everything else is planned through INSTC which may use all or Iran's ports.

It's up to Iran to make something of their port.

That "one final, final problem" isn't a problem. The US will look the other way because the port is being used for the advantage of India and Afghanistan primarily. Iran is simply a beneficiary of the project.

https://financialtribune.com/articles/domestic-economy/79897/iran-signs-2b-rail-deal-with-india
Iran Signs $2b Rail Deal With India

Not exactly. Here is what's wrong with what you stated above:

#1: You need to have peace in Afghanistan because much of their territory bordering Iran is in turmoil. Can you convince the American to bring peace there?

#2: You said "It's up to Iran". Well it's not. Not when there is pressure on multi-nationals to cut back on trade with Iran

#3: The US may not directly challenge India's use of Chabahar, but if Iran can't get enough money via investments and trade, it will become your problem indirectly.

In addition, you missed the following:

#4: India is behind in making payments for their promised investments in Chabahar

#5: Where will the money come when the priority is internal investments? (with elections coming up)

#6: If you do manage to leverage Chabahar, you would still not be able to compete with Iran, Pak and China anytime soon for trade with Afghanistan due to overall lower costs and their use of existing infrastructure. (Figure that one out).

 

[randomradio]

Not exactly. Here is what's wrong with what you stated above:

#1: You need to have peace in Afghanistan because much of their territory bordering Iran is in turmoil. Can you convince the American to bring peace there?

Yes. Easily. India has built up a very good public opinion in Afghanistan. We are building schools, hospitals, govt buildings, providing food etc. If development projects are attacked, the Taliban will only alienate the people of Afghanistan.

That's why you see pro-Pak forces attacking the Indian missions in Afghanistan, not the multitude of development projects.

#2: You said "It's up to Iran". Well it's not. Not when there is pressure on multi-nationals to cut back on trade with Iran

That shows it's up to Iran. Iran has to build up relations with other countries. We can't do much about it.

#3: The US may not directly challenge India's use of Chabahar, but if Iran can't get enough money via investments and trade, it will become your problem indirectly.

Iran getting money has nothing to do with India getting access to Afghanistan. We are not concerned with Iran's economy. We are concerned with Afghanistan. That's where we are dumping money. Eventually, we want to import Afghan's resources.

India's investment in Iran is not like CPEC. We are not investing into Iran's economy. Our objective is Afghan, Eastern Europe and Western Europe through INSTC.

In addition, you missed the following:

#4: India is behind in making payments for their promised investments in Chabahar

We are not behind on anything.

#5: Where will the money come when the priority is internal investments? (with elections coming up)

Elections are peanuts. Most of the money spent during elections for campaigns is private money, not govt money. Govt money is spent only to hold the elections which is actually not a lot.

#6: If you do manage to leverage Chabahar, you would still not be able to compete with Iran, Pak and China anytime soon for trade with Afghanistan due to overall lower costs and their use of existing infrastructure. (Figure that one out).

Irrelevant from India's PoV. You should actually read up on Af-Pak relations, trade has fallen. Af has now cut off Pak's trade access to Central Asia.

And--
http://www.thehindu.com/news/nation...nsit-trade-to-afghanistan/article19941006.ece

 

[nang2]

We are not investing into Iran's economy. Our objective is Afghan, Eastern Europe and Western Europe through INSTC.

Keep in mind that it goes through Iran.

 

[randomradio]

Keep in mind that it goes through Iran.

Sure, it's a transit country and Iran will make money through transit trade. It's normal for so many countries.

 

[nang2]

Sure, it's a transit country and Iran will make money through transit trade. It's normal for so many countries.

I don't know how happily Iranians would act as a mere tool for India's strategic objective.

 

[Thanatos]

This was a stupid idea india originating in the minds of none other than indians ofcourse. Just waste of resources. Indians wouldnt admit but that has also been a failure in indian diplomacy yet on another front.

 

[Trango Towers]

The idea behind Chabahar is for India to create a link between India and Afghanistan. Everything else is planned through INSTC which may use all or Iran's ports.

It's up to Iran to make something of their port.

That "one final, final problem" isn't a problem. The US will look the other way because the port is being used for the advantage of India and Afghanistan primarily. Iran is simply a beneficiary of the project.

https://financialtribune.com/articles/domestic-economy/79897/iran-signs-2b-rail-deal-with-india
Iran Signs $2b Rail Deal With India

iran will by linking it to CPEC

 

[randomradio]

I don't know how happily Iranians would act as a mere tool for India's strategic objective.

Have you ever heard of transit trade?

iran will by linking it to CPEC

Okay. We have no problems with what Iran does.

India will have its own trade route through Iran, like China also does.

 

[Indus Pakistan]

Eastern Europe and Western Europe through INSTC.

Are you nuts? From Mumbai Suez is the most effective route to Europe. Not a convoluted route through sea, land and then across multiple borders over vast distance.

Chah is just for Afghanistan and even that is just talk.

 

[Kyusuibu Honbu]

I don't know how happily Iranians would act as a mere tool for India's strategic objective.

Why is it you Chinese perceive any nation providing a transit point for goods as a Indian tool

That would make both Singapore and UAE as Indian tools as both these nations act as transit points for Indian exports/imports.

Heck If we have gas pipeline from Russia to India through Xinjiang would that make China a tool of India?

 

[randomradio]

Are you nuts? From Mumbai Suez is the most effective route to Europe. Not a convoluted route through sea, land and then across multiple borders over vast distance.

Chah is just for Afghanistan and even that is just talk.

The official INSTC website for Iran.
http://www.instc-org.ir/Pages/Map1.aspx

The doorway to Western Europe is Eastern Europe. Both China and India are trying to gain access to the EU through Eastern Europe. Right now, neither of us have real access to the EU.

Chabahar is only a small part of INSTC. The main point of entry for India will be Bandar Abbas for now.

Pretty much all the Central Asian states have become members.
http://www.instc-org.ir/Pages/MemberShip.aspx

 

[xyxmt]

Problem is not Iran or chahbar or Afghanistan, problem is India they cant even get anything in their own country

 

[Indus Pakistan]

The official INSTC website for Iran

Website does not prove anything. From Mumbai the most effective means of trade with Europe is through Suez. That is a fact. China does not have a port adjacent to Suez or even Indian Ocean. Thus to access Europe a Trans Siberian or Trans Central Asia route across the urals make sense.