Iran has dropped India from the Chabahar railway line project, just before it linked a deal with China? The rail line will be constructed from Chabahar port to Zahedan, along the border with Afghanistan.
Iran has cited delays from the Indian side in funding and starting the project after an agreement was signed in 2016. India has pledged more than $500 million to develop the strategically located Chabahar port.
By developing the Chabahar port, India planned to reduce its logistics cost by 20% in container transport to the commonwealth of independent states (CIS) countries. This means that India could by-pass China or Europe to trade with CIS countries.
This development comes as China finalizes a 25-year, $400 billion strategic partnership with Iran. This will include Chinese involvement in chabahar’s duty-free zones, an oil refinery nearby, and also a possible larger role in the port as well.
According to the leaked plan for cooperation between Iran and China, Beijing will extend support in manufacturing and upgrading transport facilities. Beijing also promised refurbishing of the port, refineries in exchange for Iranian oil, and gas supplies to China during this period.
This shows that China is extending its control along the Pakistan-Iran coast. In 2019 Iran had proposed a tie-up between the Chinese-run Gwadar port in Pakistan and chabahar.
The Iranian railways will use approximately $400 million, From the Iranian National Development fund for the rail project. India could not start the work due to worries that this could attract US sanctions.
The US later provided a sanction waiver for the Chabahar port and the rail line to Zahedan. India then faced difficulty in finding equipment suppliers and partners.
Article Written By Somanath Sahu
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