India’s union cabinet ministry has approved a credit line of $150m from EXIM Bank in a bid to develop the Chabahar port located outside the Persian Gulf in Iran.
A memorandum of understanding was signed by the two nations in May last year, under which, India will build and operate two berths in the first phase of development at Chabahar Port and contribute a credit of $150m to Iran.
The berths are expected to be operational within 18 months of the signing of a final contract, which will be approved by the ministers of finance, external affairs and shipping.
For the first phase of development, India will invest $85.21m and will pledge an annual revenue expenditure of $22.95m in exchange of the authority of the port for a period of ten years.
The ownership of the equipment will be transferred to Iran after ten years, or for an extended period, based on mutual agreement.
India’s shipping ministry has been authorised to establish a company in Iran to monitor the progress of the Chabahar Port Development Project and the activities entailing it.
The port is believed to offer India a sea and a land access to Afghanistan bypassing Pakistan and pave the way for an increased maritime business venture of India in the Gulf region.
A statement issued by the Indian ministry of shipping said: "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."
The Chabahar port was established as a result of an agreement reached between India and Tehran in 2003 as reported by tribuneindia.com.
The progress has been slow owing to the imposition of sanctions on Iran for their nuclear programme undertakings.
Image: An aerial view of Chabahar port in Iran. Photo: courtesy of Amirhossein Nikroo.