MoPSW Sonowal says negotiations regarding long-term contract with Chabahar Port is going on

NEW DELHI : Union Minister of Ports, Shipping and Waterways, Sarbananda Sonowal said that India and Iran are negotiating terms of the main contract on long-term usage of Chabahar Port and would look at finalising the same “as quickly as possible”.

Chabahar is India’s first overseas port project and the long-term agreement, valid for a period of 10 years and to be extended automatically, is meant to replace an initial pact which covers India’s operations at the Shahid Beheshti terminal in Chabahar port. The initial pact is renewed on an annual basis.

“We are working on the long-term contract and it will be signed soon,” Sonowal told, but did not mention a timeline within which the contract would be firmed up. “There is no timeline as such for signing the contract. But, we are on the same page on most of the issues. We are in discussions with the Iranian government,” he added.

Officials in the know said, the long-term contract had previously figured in discussions that took place during Sonowal’s visit to Iran in August last year.

Jurisdiction for arbitration of differences

The issue holding up the long-term agreement relates “only” to jurisdiction for arbitration of differences. Under Iran’s Constitution, such arbitration cannot be referred to foreign courts, and a proposal under the agreement would require a constitutional amendment. Iran reportedly is in favour of removal of the International Arbitration Clause.

India took up the development of the Shahid Beheshti Terminal under a tripartite agreement on Chabahar signed with Iran and Afghanistan in May 2016. Afghanistan is effectively no longer part of the arrangements since the takeover of the country by the Taliban last year. India had pledged it would invest $85 million in the terminal and has so far supplied cranes and other equipments worth a few millions.

India continues to equip and operate the container and multi-purpose terminals at Chabahar Port as per the existing arrangements and had recently handed over six mobile harbour cranes to Indian Ports Global Chabahar Free Trade Zone (IPGCFTZ) at the port.

“Also discussed was the need for increased investments. for hinterland development in context of trade corridor through Chabahar from the Iranian authority ,” a ministry official said.

Budget allocation

The Union Budget has earmarked₹100 crore for Chabahar port for FY24. Over the last two years, FY22 and FY23, the outlay has been ₹100 crore, each year.

Located in the Sistan-Baluchistan province on Iran’s south eastern coast (outside the Persian Gulf), Chabahar port gives India sea and land access to Afghanistan and the Central Asian region, bypassing Pakistan. The port is also being built as a gateway to the east and west of the Caspian sea as part of the International North South Transport Corridor.

Earlier in September, the first inter-modal digital International Road Transports (TIR)-based pilot transport between India and Iran through the INSTC corridor was flagged off from Jawaharlal Nehru Port. This facilitates seamless and paperless cross-border transit of goods, under the customs guarantee of the TIR system.