Iran drops India from Chabahar rail project, cites

Four years after India and Iran signed an agreement to construct a rail line from Chabahar port to Zahedan, along the border with Afghanistan, the Iranian government has decided to proceed with the construction on its own, citing delays from the Indian side in funding and starting the project.

Delay in the project from India:

• Even with the several visits by IRCON Engineers and preparations done by the Iranian Railways, India never began the work, mainly because of the worries that this can attract U.S. sanctions.
• As the United States had provided a sanction waiver for the Chabahar port, there has been a difficulty in finding partners and suppliers as they can be targeted by the U.S. Because of the US sanctions, India has already ‘zeroed out’ its oil imports from Iran due to the U.S. Sanctions.
• But with the latest development, the railway project will be completed by March 22, 2021, and the amount of $400 million will be sanctioned by the Iranian National Development Fund.

Agreement between Iran and India: Background

• The railway project was meant to be a part of India’s commitment to the trilateral project which was signed between India, Afghanistan, and Iran to build an alternate trade route to Afghanistan and Central Asia.
• The project was being discussed between the state-owned Indian Railways Construction Ltd. (IRCON) and Iranian Railways.
• Prime Minister Narendra Modi had visited Tehran, in May 2016, to sign Chahbahar agreement with Afghanistan President Ghani and Iranian President Rouhani.
• As a part of this agreement, IRCON signed a Memorandum of Understanding (MoU) with the Iranian Rail Ministry.
• The MoU stated the construction of the Chahbahar-Zahedan Railway as a part of the transit and transportation corridor in a trilateral agreement between Iran, Afghanistan, and India.
• As per the agreement, IRCON had also promised to provide superstructure work, all the services, and the financing of the projects, which is around $1.6 billion.

UPSC