NEW DELHI:
India and Iran are set to sign the long-term agreement for the operation and management of Chabahar Port on Monday. Union shipping minister Sarbananda Sonowal will be in Tehran to ink the pact, sources told Business Standard.
The port, operated by India’s state-owned India Ports Global, was seen as the gateway to unlocking India’s trade potential with European countries, as it is a shorter route to Europe. According to industry estimates, the INSTC route takes 15 days less than the Suez Canal route for shipments to be transported.
The deal, significant for its potential impact on trade and geopolitics, had been in the works for years but had been stalled for various reasons.
“Most clauses where there was a contention have been agreed on, including arbitration,” the official said.
The issue pertains to a previous deadlock in the negotiations when Iran refused to agree to an international arbitration framework, citing the need for a constitutional amendment, even as India was adamant about the arbitration clause for transparency in dispute resolution.
While the model code of conduct due to the ongoing Lok Sabha elections is in effect, the shipping minister had sought an exemption from the election commission to make the foreign visit.
Sources said this exemption was granted late last week.
India currently operates the Chabahar Port on a short-term agreement, which gets periodically renewed.
The short-term agreement and the geopolitical nature of the country has kept investors and shippers on the back foot when it comes to investing there.
“So far, there were concerns that when the government itself doesn’t have a long-term agreement with Iran for the port, how can the industry be expected to move its long term supply chain plans through it. This should get streamlined now,” the official said.
