(IN-DEPTH HOT TOPIC) Chabahar Rail Project - Why Is India dropped?

Context :

Iran has decided to drop India from the Chabahar Rail Project connecting Chabahar port to

Zahedan (Iran's bordering region to Afghanistan).

Recent events :

Iran has inaugurated track-laying project from Chabahar port to Zahedan without involving India citing reasons for delayed funding from India.
Iran is investing Dollar 400 million from its National Development Fund of the Islamic Republic of Iran.
India's owned Ircon International Limited (IRCON) was associated with this rail project.
India has developed Chabahar port facilities which have grown over the years & now compromises of a port, a free trade zone & the 628km long railway line to Zahedan.

About Chabahar Project :

Chabahar literally means 'four seasons'.
Chabahar port project is lying at Iran's Sistan-Baluchistan province along its southern coast with proximity to the Persian Gulf & the Gulf of Oman,
Gwadar port in Pakistan developed by China is nearly 100km away by sea route from Chabahar port.
Chabahar port project was agreed between Iran & India in 2003 & further strengthened by 2016 trilateral agreement between India, Iran & Afghanistan connecting Chabahar port to Zahedan & then to Kabul in Afghanistan.
This project will permanently bypass its troublesome neighbor Pakistan & is also a strategic answer to the Gwadar port of Pakistan.

Importance of Chabahar to India :

India & Iran have historic relations over the centuries & both have sought to maintain these ties in the face of any challenges.
India maintained these relations despite challenges from Iran’s adversaries like the United States, Saudi Arabia, and Israel.
India has facilitated & invested in its ambitious & strategically located Chabahar project which will bypass Pakistan’s Karachi & Gwadar port to reach Afghanistan, Central Asia, Russia & eventually to Europe someday.
Chababahr trade region is important for India’s energy imports & food and material exports from its Kandla and Mundra ports.
Chabahar rail project would have allowed India, an independent corridor to Afghanistan, Russia, Central Asia.
The Persian Gulf is a storehouse of petroleum & natural gas & the Gulf of Oman is a gateway to the Persian Gulf. This is an opportunity for India to increase its influence over the region.
Its proximity to the Persian Gulf can further save the transportation & storage cost of the petroleum products for India.
Chabahar project can assist in the inflow of the foreign capital to India through its trade, employment & uses by other countries as a trans-shipment terminal.
It can check the growing influence of China over the Arabian sea region & its neighboring countries.

Chabahar Rail Project :

Chabahar port development has moved ahead in the last few years while the Chabahar Rail project was lingering.
Chabahar rail project proposed to connect Chabahar port to Zahedan (In Iran bordering Afghanistan). Zahedan will further connect to Afghanistan's Kabul & INSTC (International North-South Transport Corridor).
Thus, Chabahar is a gateway for India to Iran, Afghanistan, Central Asia, Russia & Europe.
As per the Ministry of External Affairs sources, IRCON has completed its feasibility study by December 2019, three years after the agreement & after that, it has not heard anything from Iran's side.

Where is the issue?

In spite of all these geo-political & economical advantages of the Chabahar project, India has mostly seemed to be in captivity to International policy shifts on Iran.
USA policy particularly on Iran keeps on shifting to & fro in the last two decades.
USA placed sanctions on Iran in 2006 which ended with the ‘Joint Comprehensive Plan of Action’ (JCPOA) in 2015.
In between these years, India continued its discussions with Iran but finally make headway after lifting sanctions by the USA.
A trilateral agreement was signed in 2016 between India, Iran & Afghanistan for establishment of International Transport and Transit Corridor.
This agreement included the port project & the railway line to be constructed & funded by India's owned IRCON.
However, in 2018 USA overturned JCPOA & re-imposed heavy sanctions on Iran.
Since Iran constitutes be third-largest energy supplier to India, energy imports from Iran had to be dropped to nearly NIL.
Rupee-Rial exchange mechanism for bilateral trade between India & Iran stopped.
Although India got a waiver from the USA for Chabahar port & railway line, sanctions made it very tough for companies dealing with the USA to participate in this project, throwing a set back to this ambitious project.

What about other projects?

ONGC Videsh Ltd (OVL) has been in discussion with the Iranian gas field project, Farzad B since 2009. Now, this project will also go to an Iranian company due to a combination of US sanctions, fluctuating prices & India's delayed response.

What’s the future of India with respect to Chabahar project :

After losing these two important projects definitely a major setback to India.
India should ensure that this setback should not be an advantage for other countries like China or Pakistan.
Since China is always looking for such type of prey to trap in its debt trap.
India’s position at Chabahar port will remain strong doesn't matter who builds the railway line.
Although it’s a big loss to the reputation of India & can be a gain for China.

Way Forward :

By acting proactively India should find a way out to this situation. Citing the geo-political & economical importance of this project & to counter the effect of troublesome neighbors like China & Pakistan, it is in the larger interest of India to solve this issue & grab this opportunity without any delay.

It’s better late than never!

Multiple Choice Questions :

Which Indian port is in close proximity to the Chabahar port project?

Cambay port
Bombay High port
New Mangalore port
Kandla Port

Answer: Option d

2) India recently loses an overseas rail project in Iran. Which two important locations were to be connected with this lost project?

Chabahar port to Kabul
Kandla port to Chabahar port.
Chabahar port to Zahedan
Chabahar port to Tehran

Answer; Option C

Mains Questions

Critically examine the reasons through which India loses Chabahar Rail Project. Do you think India should be more aggressively put his points to get back the project? Give suitable examples for your views.

How the sanctions imposed by the superpowers of the world affect a country & its partner countries? What should be the strategy of India if any sanctions imposed on its partner countries? Cite a few recent examples.

Happy Studies!