A decade is nothing for a lease to operate a foreign port in an era of China’s 99-year leases, but Delhi has agreed to invest over $300 million, a third of which will be put up by India Ports Global Ltd, an Indian special purpose company.
Back in 2003, when India was gung-ho about working in Afghanistan under the US umbrella, India’s initial Chabahar trade and transit agreement with Iran was seen as Delhi’s way to thumb its nose at Pakistan’s refusal to give overland access for trade with Afghanistan.
This still remains a good-enough reason. India continues to trade with Taliban-ruled Afghanistan. With the Afghan-Pakistan border beset by problems, and Iran-Taliban relations good, the Taliban have publicly stated they want to use the Chabahar route for exports to India. It was also seen as a gateway to Central Asia, but Russia’s war in Ukraine has seen the Moscow-led International North-South Transport Corridor not get as much attention.
China is fast filling the vacuum that Russia has left in the region. However, Chabahar’s strategic importance to India is more than transport and transit. The Trump administration had carved out an exception for India’s Chabahar project from US sanctions on Iran, but the Biden administration has signalled differently. How Delhi manage this remains to be seen.