On May 13th, Iran and India signed an agreement for the development of the Chabahar port. However, the U.S. State Department has cautioned that engaging with Tehran poses a risk of sanctions.
The Indian Ports Global Limited (IPGL) and the Iranian Port & Maritime Organisation have agreed on a decade-long project to develop the Chabahar port, with IPGL investing up to USD 370 million over ten years.
Indian officials praised the agreement, highlighting its regional benefits. In contrast, the U.S. State Department issued a reminder that Iran is still under sanctions, and violators could face secondary sanctions.
Significance of Chabahar Port and Central Asian Relations
India’s interest in Chabahar port extends beyond the region. Historically, India has deep connections with Central Asia, exemplified by the Mughal dynasty from Samarkand.
Post-Soviet Union, India-Central Asia relations grew under Prime Minister Narasimha Rao, who aimed to enhance regional stability and counter religious fundamentalism. This policy continued under subsequent governments, with the Vajpayee administration signing various agreements on security, connectivity, and trade.
The Connect Central Asia policy under Manmohan Singh reaffirmed India’s interest. Prime Minister Narendra Modi further strengthened ties, aided by a favorable geopolitical climate post-2016 Iranian nuclear deal. Modi’s 2015 visit to Central Asia resulted in multiple agreements on energy, trade, security, and cultural exchanges.
In 2016, Modi signed an agreement for Chabahar port’s development, taking over its management in 2018, and sought access to the Ashgabat Agreement on multimodal transport.
India joined the Shanghai Cooperation Organization (SCO) in 2017, enhancing its role in Central Asia. The India-Central Asia Dialogue and the India-Central Asia Business Council were established to boost economic and security cooperation.
India aims to access raw materials and export markets while combating Islamic radicalism and terrorism. Geographical challenges remain, as countries like Pakistan, China, and Afghanistan lie between India and Central Asia.
The Chabahar route is New Delhi’s preferred gateway to Central Asia but is underutilized due to fears of U.S. retaliation.
U.S. Relations
The U.S. has tolerated India’s initial investments in Chabahar, and India has refrained from new investments and purchasing Iranian oil and gas.
The recent agreement tests U.S. patience, already strained by India’s stance on Russia’s Ukraine invasion and continued oil purchases from Russia.
Despite no negative impact on U.S.-India relations, India’s deepening ties with Russia, BRICS, and SCO might have emboldened the Modi government.
Indian Foreign Minister S. Jaishankar believes the U.S. will understand that expanding operations in Chabahar benefits all parties.
New investments in Iran would bolster its regime, but increased Indian presence in Central Asia could counter China’s influence, offering Central Asian countries a neutral alternative.
For the U.S., India could serve as a strategic partner to contain China in Central Asia and potentially act as an intermediary with Iran.
