Iran Drops India From Chabahar Railway Project Citing Delay In Funding; Move Coincides With Its Strategic Deal With China

Iran is now going to start the construction of a rail line from its Chabahar port to Zahedan on its own, saying that India had delayed the project's funding and other works even as the agreement between the two governments was signed four years ago.

According to a The Hindu report, the project is expected to complete in less than two years by March 2022 as the Iranian Railways is going to work without Indian assistance. The cost of the project is estimated at approximately $400 million from the Iranian National Development Fund.

What is to India's concern is the coincidence that the move comes at a time when Iran is going to sign a 25-year economic and security partnership with China for $400 billion.

Once the agreement is in place, China might look to have a major controlling role at Chabahar port, similar to its role at Pakistan's Gwadar port, along with access to its duty free zone and an oil refinery nearby. China will also have strong presence in Iran's ports, railways, telecom and other matters.

The Chabahar agreement between India and Iran was signed during Prime Minister (PM) Narendra Modi's May 2016 visit to Tehran and the project included construction of the railway line along the Afghanistan border.

The project was part of a trilateral agreement between India, Afghanistan and Iran and India's plans to build an alternate trade route to Afghanistan and Central Asia. Indian government-owned Indian Railways Construction Ltd (IRCON) was tasked to finance the project costing upto $1.6 billion and to provide services, superstructure work.

According to The Hindu, the delay from the Indian side is seen connected to United States (US)-imposed sanctions on Iran. India feared that if the work was started, it could attract US ire. This was despite various site visits by IRCON officials and preparations by Iranian Railways.

According to officials cited in the report, the US had, however, waved sanctions on the Chabahar port and the rail line but IRCON still had difficulties in finding find equipment suppliers and partners, as they could have faced US's rage.

The report says, Indian Ministry of External Affairs and IRCON have not yet commented on the matter.

On the other hand, the Chinese involvement in Iranian ports is a matter of worry for India which already is facing challenges from various South Asian countries under China's influence.

An 18-page leaked document terms the partnership of the two countries as "Comprehensive Plan for Cooperation between Iran and China". The agreement that is being finalised by officials of both countries will extend from "investments in infrastructure, manufacturing and upgrading energy and transport facilities, to refurbishing ports, refineries and other installations."

China will also receive Iranian oil for next 25 years at highly discounted rates, said an Iranian official.

Only to more tension for India, there were also reports that Iran could lease out strategically important Chabahar port to China. The reports, however, were denied by Iranian officials.

But Iran had proposed a possible tie-up between Gwadar port and Chabahar last year, along with offering interests to China in its another crucial Bandar-e-Jask port.

Former Indian ambassador to Iran K C Singh cautioned Indian authorities to observe the Iran-China proximity carefully.

"[The Iran-China deal] impinges on India’s “strategic ties” with Iran and the use of Chabahar port. Jask lies to west of Chabahar & right before Straits of Hormuz. China would thus extends its control along the Pakistan-Iran coast," he wrote in a Twitter post.

Quoting New York Times, he added that if China got access to Iranian city of Jask (supposed entrance to Persial Gulf) would give China a strong hand in the sea route for most of world's oil.