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Economy

India to invest $500m in Iranian port, bypass Pakistan

Modi, left, and Rouhani nurture an ancient friendship -- with U.S. sanctions on Iran now lifted, India is investing $500 million in the Iranian port of Chabahar to access markets geographically obstructed by Pakistan.   © Press Information Bureau

NEW DELHI -- India and Iran signed a landmark pact on Monday to develop Chabahar, a port in the Persian Gulf, that New Delhi expects will expand its trade with landlocked Afghanistan and energy-rich Central Asia by bypassing more direct -- but unavailable -- land routes through Pakistan.

It was among 12 agreements signed by officials of the two countries during Prime Minister Narendra Modi's two-day visit to Iran that started on Sunday. These also covered cultural exchanges, science and technology, and railways.

"The bilateral agreement to develop the Chabahar port and related infrastructure, and availability of about $500 million from India for this purpose, is an important milestone," Modi said during a joint media briefing with President Hassan Rouhani.

The Iranian president called Chabahar a "very big symbol" of cooperation between Iran and India. He said Iran attached "great importance" to relations with India, which he called "a major power."

Pakistan lies between India and both Afghanistan and Iran, and Islamabad has always denied New Delhi overland access. Chabahar sits on the Gulf of Oman near Iran's border with Pakistan, providing India with the possibility of virtually direct sea access.

Apart from helping India access war-torn Afghanistan, where it is engaged in rebuilding efforts, the port opens opportunities to Indian companies wanting access to Iran, Central Asia, Russia, and other regions beyond.

India and Iran have talked about developing the port since 2003, but progress was stymied by U.S.-led economic sanctions on Iran over its controversial nuclear program. These were lifted in January.

Analysts see Chabahar as a way for India to counter China's influence in the region. Pakistan last year allowed ally China rights to develop over 2,000 acres in Gwadar, a port near its border with Iran. Gwadar lies on the Arabian Sea, and offers access to the Middle East and Africa.

"India and Iran are not new friends. Our [friendship] is as old as history," said Modi. "As friends and neighbors, we have shared interest in each other's growth and prosperity, and joys and sorrows ... The outcomes and agreements signed today open a new chapter in our strategic partnership."

During his meeting with Rouhani, Modi also discussed regional security. "We have agreed to consult closely and regularly on combating threats of terrorism, radicalism, drug trafficking, and cybercrime," Modi said.

Later in the day, Modi participated in a summit with Rouhani and President Ashraf Ghani of Afghanistan. The three leaders witnessed the signing of a historic trilateral transport and transit corridor agreement focused on Chabahar. Modi called it a corridor of peace and prosperity, and Ghani said 100 years hence historians will describe it as the start to regional cooperation.

"With our joint investments, we can connect India to Afghanistan, Central Asia and Europe," Rouhani told reporters. "Bahar means 'spring,' and I hope this port means spring for all of us," he said. "Today will henceforth be called the Day of Chabahar."

India also wants to help Iran develop its Farzad B gas field, which was discovered in 2008 by ONGC Videsh, the overseas arm of India's state-run Oil and Natural Gas Corp. The field has an estimated 12.8 trillion cubic feet of gas reserves, but Western sanctions have so far hindered exploration.   

India imports around 80% of its crude oil, most of which comes from the Arabian Gulf countries, and imports 35% of its natural gas requirements.

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