An Overview of Indian Industries Affected by Chabahar

India was one of the most important partners in developing and transforming the Chabahar Port in Iran. The landmark agreement was signed between India, Afghanistan, and Iran during Prime Minister Narendra Modi’s visit to Tehran in 2016. The agreement was made to establish the International Transport and Transit Corridor.

Many necessary steps have been taken to speed up the development of the port and release its true potential. Chabahar is crucial to India as it provides access to Afghanistan and is also part of the International North-South Transport Corridor, which links India to Eurasia. Let us learn more to get an overview of the Indian Industries affected by Chabahar. 

Trade Between India and Central Asia

Due to Pakistan’s refusal to allow India to use its territory as a transit point for trade with Central Asia and Afghanistan, India was forced to sign an agreement with Iran to develop Chabahar. This was done to build trade between India and Central Asia and Afghanistan without passing through Pakistan. In October 2017, India sent the first delivery of wheat to Afghanistan via the Chabahar port.

Following Pakistan’s denial of a transit route to India, Chabahar port will reduce transport costs and time to Iran, Afghanistan, and Central Asia by a third. 

Chabahar is India’s first significant overseas port project. It is considered a reaction to China’s Gwadar Port development in Pakistan. Gwadar is 90 km from Chabahar in Pakistan’s Baluchistan province. China is attempting to obtain direct access to the Indian Ocean via Pakistan. Thus, Chabahar can be viewed as an Indian endeavour to oppose Chinese dominance in the Indian Ocean. 

Due to the lack of viable routes, trade between India and Central Asian countries has never been able to grow to its full potential. The projected 7200 km International North-South Corridor will connect five countries of Central Asia. Central Asia is one of the world’s most resource-rich regions that are yet to be fully utilised. Expanding trade between India and Central Asia will benefit India and Central Asia’s development. 

Iron ore resources are reported to be the greatest in Asia, in the Hajigak region of Afghanistan. Seven Indian businesses have previously purchased mining rights, but the lack of a feasible trading route has hampered the project’s development. Afghanistan is no longer reliant on Pakistan due to the opening of the Chabahar port. 

While Iran has a lot of potential in terms of energy, trade, and connectivity, the data on economic and energy linkages does not look positive. After the US sanctions waivers expired in May 2019, India halted oil imports from Iran. 

Between April 2019 and January 2020, its imports fell from $13 billion in 2018–2019 to about $1.35 billion. In the same way, its exports dropped from $3.5 billion in 2018–2019 to $2.80 billion in the current fiscal year. Both the countries have been working hard to improve trade and connectivity between corporations.

Indian Industries Affected by Chabahar 

An overview of the Indian Industries affected by Chabahar: 

• India has set up a urea plant in Chabahar to cater to the needs of Afghanistan, Iran, and Central Asia. Later, the companies which are engaged in agricultural machinery may also benefit from it. 
• Indian agriculture is expected to benefit from Chabahar as it will facilitate Indian Agriculture exports to Afghanistan. The first consignment of wheat was already sent to Afghanistan via Chabahar to test the port’s stability. 
• The fact that National Aluminium has signed a Memorandum of Understanding to locate an aluminium facility in Chabahar demonstrates the Indian mining sector’s potential for growth. India is also considering connecting Chabahar to Afghanistan’s mineral-rich Hajigak region to earn more revenue.
• Because India has planned significant infrastructure investment, including the construction of roads, railway lines, and expansion of Chabahar port, sectors such as iron and steel, cement and other infrastructure business might benefit significantly. 
• As the region’s infrastructure progresses, so will the investment in supply chain management and logistics, thereby earning more revenue.
• Last but not least, a direct link to energy-rich Central Asia will go a long way towards securing India’s energy security. 

Conclusion

After highlighting some of the Indian Industries affected by Chabahar, we concluded that there are unconfirmed reports that traffic is being diverted from Karachi to Chabahar. This indicates that Chabahar is already exhibiting signs of operational success. 

The port of Chabahar is 800 km closer to Afghanistan than Karachi’s port. It is also known as the ‘Golden Gate’ to all these landlocked countries because of its proximity to Turkmenistan Uzbekistan in Central Asia. 

As India strives to become a global player, it must broaden its reach to include all parts of the globe. So far, India’s footprint in Central Asia, Latin America, and Eastern Europe has fallen short of its goals.