India and Iran: The Chabahar rail link issue exposes the bilateral challenges

What happened?

Indian daily The Hindu reported on 14 July that four years after India and Iran agreement to construct a rail line from Chabahar port to Zahedanthe Iranian government decided to proceed on its own, citing delays from the India. Later, a deputy of Ports and Maritime Organization of Iran - Farhad was quoted to have stated the report as false, as there was no deal between India and Iran and railway link.

The official Indian spokesperson stated on 16 July, “IRCON was appointed by Government of India to assess the feasibility of the project and was working with CDTIC, an Iranian government company and completed site inspection and review of the feasibility report. Detailed discussions also took into account the financial challenges that Iran was facing. In December 2019, these issues were reviewed at the 19th India-Iran Joint Commission Meeting and Iran was to nominate an authorized entity to finalize issues. This is still awaited.”

What is the background?

First, Chabahar port as India’s gateway to Central Asia. Chabahar, Iran’s only deep-sea port open India’s route to reach the Central Asian Republics (CAR) and Afghanistan. Inaugurated in 2017, this port is located strategically close to the China- Pakistan Gwadar port. The Chabahar rail link is part of the connectivity project to reach Afghanistan and further to the CAR. The rail track is proposed to be laid between Chabahar and Zahedan, extending to a distance of 628 km.

Second, India has been eyeing to clinch the contract of the Farzad-B gas field since 2009. The ONGC Videsh Limited was part of initial exploration in the gas field. After the discovery stage, the negotiations to proceed with the exploration was halted owing to US’ sanctions on Iran and inhibitions from both the Indian and Iranian sides. Last week, the head of the National Iranian Oil Company announced the award of the contract to develop the gas field to a local operator.