India and Iran have signed a 10-year agreement to kick-start full-fledged operations at the Chabahar Port, with the Iranian Ports and Maritime Organization procuring essential cargo handling equipment for India Ports Global Ltd (IPGL). The equipment purchase cost will be reimbursed to the Iranian company in United Arab Emirates Dirham (AED), with IPGL increasing its investment from $85 million to $120 million. The contract includes the procurement of rail-mounted quay cranes and rubber-tired gantry cranes within specified timeframes.
The agreement aims to overcome a six-year equipment purchase hurdle that has delayed operations at Chabahar port, which India sees as strategically important. IPGL had faced challenges in buying the equipment due to sanctions imposed on Iran over its nuclear program. A joint procurement committee headed by the Director General of the Sistan and Balochistan Provincial Ports and Shipping Authority will finalize suppliers and prices within two months, with a company in Dubai facilitating the procurement.
Chabahar port is crucial for providing India with access to Afghanistan and Central Asia via Iran, serving as a strategic route for regional sea transit traffic. The port is also part of the International North-South Transport Corridor, offering connectivity between India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia, and Europe. Despite delays in equipment procurement, India and Iran are making efforts to operationalize the port through short-term interim contracts until challenges in financing equipment purchase are overcome.
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