The pact between India and Iran to develop the strategically located Chabahar port, along with the one with Afghanistan on road and rail network, will counter China and Pakistan’s alliance in South West Asia, BMI Research said on Wednesday.
“The agreement between India and Iran to develop the latter’s port of Chabahar is a major boost for both countries, as well as Afghanistan. In particular, growing co-operation between the three countries will counterbalance China-Pakistan alliance in the geopolitics of South West Asia,” it said.
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Prime Minister Narendra Modi visited Iran earlier this week, the first by a Indian Prime Minister in 15 year.
A “milestone” pact on the strategic Chabahar Port in southern Iran, which will give India access to Afghanistan and Europe bypassing Pakistan, was among the agreements signed by India and Iran, which also agreed to cooperate on combating radicalism and terror.
Besides the bilateral pact to develop the Chabahar port, for which India will invest USD 500 million, a trilateral Agreement on Transport and Transit Corridor was also signed by India, Afghanistan and Iran, which Modi said could “alter the course of the history of the region”.
The bilateral agreements signed by India and Iran after detailed discussions between Modi and President Hassan Rouhani included one on setting up of an aluminium plant and another on laying a railway line to give India access to Afghanistan and Central Asia.
BMI Research, a Fitch Group company, said the governments of India, Iran and Afghanistan have taken a significant step towards closer co-operation by signing an agreement on May 23 to develop Iran’s southern port of Chabahar.
“Once the port is developed, it will provide a major boost for Indo-Iranian trade, and also provide a new route for Afghanistan’s exports, bypassing Pakistan.
“In particular, the new port at Chabahar is designed to compete with Pakistan’s port of Gwadar, which is being developed with Chinese assistance as part of the China-Pakistan Economic Corridor (CPEC),” it added.
CPEC in turn is part of a much bigger Chinese initiative known as ‘One Belt One Road’ (OBOR), which envisages new land and sea routes connecting China to Western Eurasia and East Africa.
Iran stands to benefit from Chabahar as it will get an enhanced port from which to export more goods to India and the Asia-Pacific region at a time when it is seeking to reintegrate itself into the global economy, BMI Research said.
Iran will also benefit from increased Indian investment. For their part, it seems that Indian firms are seeking to gain first-mover advantage in one of the world’s biggest new emerging markets, at a time when Western companies are still hesitant about entering Iran, it said.
India will strengthen its ties with Iran and thus its economic presence in the Gulf region.
In addition, trade to and from Chabahar will allow India to increase commercial influence in Afghanistan, physically bypassing Pakistan, whose generally hostile stance towards India impedes New Delhi’s ability to develop ties with Kabul, it added.
India’s interests in Afghanistan are mainly focused on challenging Pakistan’s position, but India is also interested in tapping Afghanistan’s natural resources and those of Central Asia, the agency said.
Afghanistan will get a new trade outlet to the Gulf, Arabian Sea and Indian Ocean bypassing the port of Karachi in Pakistan.
Afghan-Pakistan relations are complex and frequently strained due to Islamabad’s past support for the Taliban insurgency in Afghanistan. The Taliban suffered a blow on May 20, when its leader Mullah Akhtar Mansour was killed in a US drone strike, BMI Research said.