TEHRAN, May 14, 2024 (BSS/AFP) - India and Iran on Monday signed a 10-year
contract to develop and equip the strategic Chabahar port in Iran as India
seeks to grow trade in west and central Asia.

The agreement will give India 10-year access to use the port, located close
to Iran's southeastern border with Pakistan, according to Iran's Ministry of
Roads and Urban Development.

The contract will in turn see India Ports Global Limited (IPGL) invest $370
million into "providing strategic equipment" and "developing the transport
infrastructure of the port".

The United States, which has warm ties with India but a long adversarial
relationship with Iran, had begrudgingly accepted the port project while the
US military was in Afghanistan, as it saw New Delhi as a valuable partner to
back the Kabul government that fell in 2021.

But Washington warned Monday that Indian companies could face sanctions, as
US relations sour with Iran over Tehran's support for Hamas in its war with
Israel.

Iran's urban development minister Mehrdad Bazrpash and India's ports and
shipping minister Sarbananda Sonowal signed the contract in the town of
Chabahar, in a ceremony broadcast live on state media.

India in 2016 agreed to finance the development of the Iranian port as a
trading hub for central Asia as Prime Minister Narendra Modi sought to revive
economic ties with Tehran after the lifting of sanctions.

Modi and former Iranian president Hassan Rouhani oversaw the signing of a
memorandum of understanding for the provision of a line of credit from
India's EXIM Bank to develop the port.

The development of the port however stalled, despite waivers to sanctions
that the United States began reimposing in 2018 after withdrawing from a
landmark 2015 nuclear deal with Iran.

"Chabahar... can act as a focal point in the transit developement of the
region," Bazrpash said at the signing ceremony.

"We are pleased with this agreement, and we have full trust in India," he
added.

The Indian minister said the partnering nations "are seeking to develop
Chabahar port as much as possible, taking into account the interests of the
two countries for joint access to regional markets".

This "long-term contract symbolises the enduring trust and effective
partnership between India and Iran," he added.

In Washington, the State Department said there would be no exemptions to US
sanctions for Indian companies in Chabahar.

"As it relates to the United States, US sanctions on Iran remain in place and
will continue," State Department spokesman Vedant Patel said.

"Any entity -- anyone -- concerned with business deals with Iran, they need
to be aware of the potential risks that they're opening themselves up to and
the potential risk of sanctions."

In 2019, prior to the Covid pandemic, both countries agreed to speed up the
project after a visit by India's external affairs minister Subrahmanyam
Jaishankar to Tehran.

Chabahar port is on the Indian Ocean about 100 kilometres (62 miles) west of
the Pakistani border. Pakistan, India's historic rival, is developing its
Gwadar port with the support of China.