Iranian government drops India from Chabahar rail project

India and Iran signed an agreement to construct a rail line from Chabahar port to Zahedan, along the border with Afghanistan four years ago. Now the Iranian government has decided to proceed with the construction on its own, citing delays from the Indian side in funding and starting the project.

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Key-Points

Last week, Iranian Transport and Urban Development Minister inaugurated the track-laying process for the 628 km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan.

The entire project would be completed by March 2022, and that Iranian Railways will proceed without India’s assistance, using approximately $400 million from the Iranian National Development Fund. The development comes as China finalises a massive 25-year, $400 billion strategic partnership deal with Iran.

The railway project, which was being discussed between the Iranian Railways and the state-owned Indian Railways Construction Ltd (IRCON), was meant to be part of India’s commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.

The MoU was to construct the Chabahar-Zahedan railway as “part of transit and transportation corridor in trilateral agreement between India, Iran and Afghanistan”. IRCON had promised to provide all services, superstructure work and financing for the project (around $1.6 billion).

Iranian officials denied a report that also suggested Chabahar port, where India took, will be leased to China. However, Iran proposed a tie-up between the Chinese-run Pakistani port at Gwadar and Chabahar last year, and has offered interests to China in the Bandar-e-Jask port 350km away from Chabahar, as well as in the Chabahar duty free zone.