With the China-developed Gwadar port in Pakistan fast nearing completion, India will on Monday ink a key agreement with Iran to develop Chabahar port that will give a fillip to New Delhi's push for connectivity and transit with Afghanistan and beyond in Central Asia.
The agreement to develop Phase-I of Chabahar port, to be inked during Prime Minister Narendra Modi's two-day visit to Tehran, is seen as India's counter to the development of the deep-sea port of Gwadar, in Balochistan, that opens into the Arabian Sea, close to the Strait of Hormuz, and will allow China access to the Indian Ocean.
The development of Chabahar port, located just over 70 km from Gwadar, will allow India to circumvent Pakistan and open up an alternative land-sea route for its trade with Afghanistan. India has already spent $100 million in building the 220-km Zaranj-Delaram highway in Afghanistan, also known as Route 606, which connects to Chabahar.
The trilateral agreement on Monday between Iran, India and Afghanistan will be inked in the presence of Iranian President Hassan Rouhani, Prime Minister Narendra Modi and Afghan President Ashraf Ghani who would attend a ceremony to break the ground to develop Chabahar port infrastructure.
Chabahar is the closest port to Afghanistan. It is connected to the city of Zaranj in Afghanistan's south-western province of Nimruz.
An agreement for Exim Bank to provide $50 million line of credit for the development of Chabahar port is also to be inked during Modi's visit.
The Indian investment in the Phase-I of the port project would be more than $200 million.
The commercial agreement on development and operation by India of Phase-I of Chabahar will be signed between Indian Ports Global Pvt Ltd, a joint venture between Jawaharlal Nehru Port Trust and Kandla Port Trust, with Arya Bandar Company of Iran.
The Indian company will undertake the development of two jetties in Chabahar port for a period of 10 years and will transfer all cargo consignments except for oil products.
The development of the Chabahar port is also expected to give a fillip to the International North South Transport Corridor, another geo-strategic initiative being pushed by India to connect with Central Asia and Russia.
Once Chabahar port is developed, its link with the Zaranj-Delaram highway will boost further connectivity to Afghanistan via the over 2,000 km-Afghanistan Ring Road, which connects 16 Afghan provinces, from Herat, Mazar-i-Sharif, Kabul, Ghazni, and Kandahar to Tajikistan.
Giving further impetus is Japan evincing interest in joining the Chabahar port project, which offers prime access to shipping lanes in the Indian Ocean.
According to Japanese media reports, Prime Minister Shinzo Abe is hoping to ink a deal when he visits Tehran later this year that would see Japan teaming up with India on the development of a port, logistics and industrial complex in the Chabahar free trade zone located on the Gulf of Oman.
The Japan International Cooperation Agency is expected to draw up plans for investments by the end of the year.
India is also reportedly to finance another road network inside Afghanistan to enable Iran to access as far as Tajikistan through a shorter route.
The Chabahar port project has been over a decade in the works. India and Iran first decided to develop the port in 2003. However, matters did not move due to the US sanctions on Iran over Tehran's nuclear programme, which were lifted earlier this year.
Pakistan has also been eyeing the Chabahar port.
In March this year, Pakistan and Iran discussed the possibility of better connectivity between Gwadar and Chabahar during talks between Pakistani Prime Minister Nawaz Sharif and Iranian President Rouhani in Islamabad.
The contract for Chabahar will be the highlight of Modi's Iran visit during which he will meet with Supreme Leader of Iran Ali Khamenei.
Modi's visit to Iran follows after he visited Saudi Arabia in early April.
He will also visit a gurdwara in Tehran and inaugurate an international conference on "India-Iran: Prospects and Retrospects". He is to release a rare manuscript in Persian brought out by the Indian Council of Cultural Relations at the conference.