Iran drops India from the Chabahar rail project

India-Iran relation has taken another downturn. Four years after India and Iran signed an agreement to construct a rail line from Chabahar port to Zahedan, along the border with Afghanistan, the Iranian government has decided to proceed with the construction on its own. Citing delays from the Indian side in funding and starting the project. 

Iran will be using $400 million from the Iranian National Development Fund to construct a 628km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan. 

Initially Indian Railways Construction Limited (IRCON) a state-owned subsidiary of the Indian government. That had signed an MoU with the Iranian Rail Ministry for the construction of this project as a part of the trilateral agreement between India, Iran, and Afghanistan. This project would have helped India to bypass Pakistan and establish a trade route connecting the central Asian countries and the whole of Europe.

Fearing the US sanctions, despite several visits to Iran by the engineers of IRCON, the preparations of railway construction never began. Even though the US had provided a waiver against Chabahar port the fears of the suppliers and contractors did not perish. Earlier in 2016, India had even “Zeroed out” its oil imports from Iran when Iran was one of the largest oil suppliers to India due to fears of US sanctions.

This move of Iran to drop India from the Chabahar rail project comes when they are now close to finalizing a $400 billion 25-year strategic partnership with China which will include Chinese involvement in Chabahar’s duty-free zone. An oil refinery nearby and possibly a larger role in the Chabahar port thus complicating the India-Iran relations even further. 

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Update by Niraj Kumar

News source: Ship Technology