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Sunday, April 11, 2021

Iran drops India from Chabahar Rail project — what does it mean for India?

Iran dropped India from the Chabahar rail project because of “absence of active Indian engagement,” after four years of signing an agreement to construct the line to Zahedan. The Iranian government has now said that they will construct on their own. As Iran drops India from Chabahar Rail project, we try to look at what it means for India? Let’s find out.


“It was expected that in addition to the investment in Chabahar Port, India could also play a more crucial role in funding and constructing this strategic transit route from Chabahar to Zahedan and from Zahedan to Sarakhs at the border with Turkmenistan which in the absence of active Indian engagement and partnership, currently is under construction by Iranian funding and engineering capacities,” said Iranian sources to The Hindu. It has also come to the knowledge of India that the entire project would near its completion by March 2022 and Iranian Railways are set to proceed without India’s assistance. Iranian sources have also stated that certain obstacles have been discovered in the way of making material for the railway lines, which were being sorted out.

The US problem

As Iran cited delays on funding from the Indian side, it has pointed to a probable impact of US sanctions on India’s projects with Iran. Though India had secured an exemption for the Chabahar port from US sanctions, bilateral ties with Iran were strained in February this year after the riots in Delhi drew criticism from the Iranian Foreign Minister Javad Zarif. Apart from that incident, the India-Iran energy trade was hit when the country shut energy imports from Iran because of the imminent threat of US sanctions, which also, in turn, affected the IRCON-Iranian Rail Ministry MoU for the construction of the Chabahar-Zahedan rail project. All of this only indicates that the ties between the two countries have taken quite a hit in the recent past.
Pakistan Foreign Minister Shah Mahmood Qureshi recently has also cited a different reason behind the straining ties, saying, India faced “expulsion by Iran in Chabahar project due to its wrong policies”, adding that the country had “gradually strained” its relations with all its neighbours — Pakistan, China, Nepal and Bangladesh. “Be it Pakistan, China, Nepal, or Bangladesh, Ind­ia’s ties with its neighbours are gradually becoming tense,” he said. In a statement, Qureshi also added that India was spoiling its relations due to a “Hindutva mindset”. “The so-called impression of a ‘Shining India’ is over now owing to incumbent government’s policies of hatred and bias,” he had said.

The China issue

The announcement of India’s exclusion from Iran’s project came as China finalised a massive 25-year, $400 billion strategic partnership deal with Iran, which has the potential to be harmful to India’s plans. Navtej Sarna, former ambassador of India to the US and high commissioner to the UK writes “though neither side has officially confirmed details, the Iranian cabinet has signed off on an agreement that has been in the works since President Xi Jinping’s visit to Tehran in January 2016.”
He adds that even if these leaked reports are to be believed, India’s concerns do not decrease by any means. “Under a 25-year pact, China will invest $400 billion in Iran’s petroleum sector as well as its core infrastructure — banking, telecom, ports, airports, high-speed railways, metro and free-trade zones. Iran will become a crucial pivot of China’s Belt and Road initiative (BRI), linking China to Europe. A military dimension envisages joint military exercises, joint training, joint research and development of weapons. China will get assured supplies of Iranian oil, gas and petroleum products at highly discounted prices.”

While China is making its grasp stronger economically and politically on Iran, it can be detrimental for India on a lot of fronts, say experts. “First, Tehran has watched our growing proximity to the US and Israel with a resentful sullenness. The cutting of oil imports and delays in project implementation has further shown the limits of the bilateral relationship; civilisational links can only take us so far and no more. Iran’s pact with China will strengthen the perception that we are in the ‘other camp’. Given our energy dependence and large diaspora, great power rivalry would not be our preferred game in West Asia,” said Sarna. Moving on to his second point, he says, “China’s influence will facilitate better relations between Iran and Pakistan, already evident in the conciliatory attitude shown by Pakistan to militant attacks from across the border in Balochistan. The two could also narrow their differences on Afghanistan, with a direct impact on India’s interests.”

How can China hamper India’s plans?

Thirdly he says, “Chinese investment in ports and railways can hamper India’s plans to get access to Central Asia and beyond through Iran. The report that India will no longer be a part of the Chabahar-Zahidan project foreshadows this scenario. Iran’s ambassador in Islamabad has spoken of a golden ring of China, Russia, Iran, Pakistan and Turkey and of a western arm to the China-Pakistan Economic Corridor (CPEC) and that would link Gwadar and Chabahar to China by rail through Pakistan. Further, our own economic limitations and the shadow of US sanctions will make it difficult for Indian companies to compete in Iran, particularly if the hundred proposed projects are aligned to a Chinese economic paradigm.”
Lastly and finally he adds, “Even if the Chinese do not get a major slice of Chabahar, they are keen to participate in the development of Bandar-e-Jask, the port outside the Straits of Hormuz. Iran envisages Jask as its main oil-loading point in the near future, it can then close the Straits without harming its own exports. In a worst-case scenario, Jask could become another Chinese dual-use port and with Gwadar and Djibouti threaten India’s energy and maritime security in the Arabian Sea.”

Several experts are calling this a loss for India in numerous ways. While connectivity seems to be the way to go around the world, India seems to be losing out on that with this exemption, say experts. And this loss could turn out to be beneficial for China and India is thus advised to keep a close watch at this space created by its exit from the Iran railway project. For India, the project had geostrategic importance and significant for India-Iran relations. But now it has become a pertinent question —what will happen to India’s plans and how will it be affected? Only time will tell.

Do not have time to read? No problem. Every week, we produce a new episode in the Indian policy podcast series “In The Interest Of India”. Listen here

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