The union cabinet on Wednesday approved the provision and operationalisation of a $150 million EXIM Bank credit line for developing Iran's
Chabahar Port that India intends to use as a transhipment point for expanding maritime commerce in the region.
"Chabahar Port lies outside the Persian Gulf in Iran and will help in expanding maritime commerce in the region," an official statement said after a cabinet meeting chaired by Prime Minister Narendra Modi.
"India is negotiating this project to facilitate the growing trade and investment with Iran and other countries in the region, notably Afghanistan, and also to provide opportunities to Indian companies to penetrate and enhance their footprint in the region," it added.
A memorandum of understanding (MoU) was signed for this by Minister for Shipping, Road Transport and Highways Nitin Gadkari and his Iranian counterpart in May last yeard.
According to the MoU, India will equip and operate two berths in Chabahar Port Phase-I with capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease.
Ownership of equipment will be transferred to Iranian side on completion of the 10-year period or for an extended period, based on mutual agreement.
The Iranian side had requested for provision of a credit of $150 million in accordance with the MoU. The operation of the two berths will commence within a period of maximum 18 months after the signing of the contract.
The two berths will be operated by the India Ports Global Private Limited, a company promoted by the Jawaharlal Nehru Port Trust and Kandla Port Trust - two major ports working under the shipping ministry.
The cabinet has now authorised the ministers of finance, external affairs and shipping to approve the final contract with Iran and for resolution of any issue arising in implementation of the project.
The cabinet has also authorized the shipping ministry to form a company in Iran for implementing the Chabahar Port Development Project and related activities, according to the official statement.