[Editorial Analysis] Lost opportunity: On India losing Chabahar project

Mains Paper 2: International Relations
Prelims level: Chabahar rail project
Mains level: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

Context:

• Right from the beginning of its tenure, the government has underlined the geostrategic importance it attaches to the Chabahar port project.

• The project, signed in 2003, has been a symbol of traditionally important India-Iran ties.

• Connected by sea lanes to ports on India’s west coast, Chabahar would form the fulcrum of India’s outreach to Russia and Central Asia, enhancing connectivity, energy supplies and trade.

IMPORTANCE OF CHABAHAR:

• Given that Pakistan had blocked Indian aid to Afghanistan and all trade over land, Chabahar provided India an alternative to permanently bypass its troublesome neighbour.

• As a result, the government fast-tracked plans for the project, and in 2016, Prime Minister was in Tehran to sign a trilateral trade and transit agreement with Iranian President and Afghanistan President.

• According to the MoUs, India would be granted a 10-year lease to develop and operate two terminals and five berths, access to the Chabahar free trade zone, and the opportunity to build the 628 km rail line from Chabahar to Zahedan, just across the border from Afghanistan.

• The government acted quickly to develop Chabahar port facilities, sent exports to Afghanistan in 2018, and has moved over half-a-million tonnes of cargo, including grains and food supplies, for Afghanistan again, through the port.

MOVING AWAY:

• However, the rail line has never taken off for a number of reasons despite a commitment from state-owned IRCON, to undertake its construction at an estimated $1.6 billion.

• While contract changes by the Iranian side and delayed responses from the Indian side were part of the problem, the main hurdle has been the fear of American penalties.

• Even though India was able to negotiate a sanctions waiver for the Chabahar port and rail line from the U.S., New Delhi dragged its feet on the matter.

• After appeals to India, including one issued by its Foreign Minister Javad Zarif when he visited Delhi in January this year, Iran decided to go on its own.

• Iran began to lay tracks for the line connecting Chabahar to Afghanistan and Turkmenistan, last week.

LOST OPPORTUNITY:

• Regardless of the reasons for India’s inability to join the railway project, the decision can only be seen as an opportunity lost.

• The impression that India wavered due to U.S. pressure, especially after India cancelled oil imports from Iran, also questions New Delhi’s commitment to strategic autonomy.

• Iran claims it will fund the railway using its own resources.

• It seems to have embarked on the Chabahar-Zahedan project with a confidence borne from an imminent deal with China for a 25-year, $400 billion strategic partnership on infrastructure, connectivity and energy projects.

CONCLUSION:

• In a world where connectivity is seen as the new currency, India’s loss could well become China’s gain, and New Delhi must watch this space, created by its exit, closely.

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Prelims Questions:

Q.1) With reference to the Agriculture Infrastructure Fund, consider the following statements:

1. The scheme shall provide a medium – long term debt financing facility for investment in viable projects for post-harvest management Infrastructure and community farming assets through interest subvention and financial support.

2. All loans under this financing facility will have interest subvention of 3% per annum up to a limit of Rs. 2 crore. This subvention will be available for a maximum period of seven years.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C

Mains Questions:

Q.1) What is Chabahar project? What are the reasons behind dropping India from this project? What are the implications of this?

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