India Strikes Port Deal With Iran Despite American Objection

07/05/2015 5:54 PM IST | Updated 15/07/2016 8:25 AM IST
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India reached a deal on Wednesday to develop a strategic port in southeast Iran despite U.S. pressure not to rush into any such trade agreements before world powers clinch a final nuclear accord with Tehran.

Shipping Minister Nitin Gadkari and his Iranian counterpart Abbas Ahmad Akhoundi signed a memorandum of understanding to develop the Chabahar Port on the Gulf of Oman, near Iran's border with India's arch rival Pakistan.

"Indian firms will lease two existing berths at the port and operationalise them as container and multi-purpose cargo terminals," the Indian government said in a statement, adding that a commercial accord would be needed to implement the pact.

India and Iran agreed in 2003 to develop the port, but the venture has made little progress because of Western sanctions tied to Tehran's disputed atomic programme.

Now, spurred on by Chinese President Xi Jinping's signing of energy and infrastructure agreements with neighbouring Pakistan worth $46 billion, Indian Prime Minister Narendra Modi wants swiftly to sign trade deals with Iran and other Gulf countries.

Encouraged by a provisional, April 2 deal over Tehran's nuclear programme, India recently sent a delegation to Iran to scout for trade, energy and infrastructure deals.

However, the United States has expressed concern that India is moving too fast and could undermine a sanctions regime imposed on Iran to try to bring it to the negotiating table.

Washington has said there is no guarantee that a final deal will be secured with Tehran by a June 30 deadline.

"Sanctions won't solve the problem, but they certainly will continue to bring Iran to a final agreement," Richard Verma, the U.S. ambassador to India, said earlier on Wednesday.

For India, one advantage of a container and cargo terminal at Chabahar is that it would provide landlocked Afghanistan with access to the sea, reducing its reliance on Pakistan.

Iran has also proposed a free-trade agreement with India, a trade ministry source said. Rupee-denominated trade with Iran, started in 2012 because of complications arising from sanctions, has almost doubled Indian exports to Tehran in the past two years to $4 billion.

Now, Indian exporters want to build on that, using a free-trade zone being developed near Chabahar to export more to the Commonwealth of Independent States, made up of former Soviet Republics, said Mumbai-based Khalid Khan, regional head of the Federation of Indian Export Organisations.

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