India said on Friday that it will sign a contract with Iran to build and run a strategic port in the country’s southeast during the next visit to Tehran by Prime Minister Narendra Modi.
The deal envisages the development of two terminals and cargo berths at Chabahar, on the Gulf of Oman.
Gopal Baglay, a foreign ministry official in charge of Iranian ties, has told reporters that India would make an initial investment of more than $200 million in the port, of which India's Exim Bank would provide a credit line of $150 million.
"The focus of the trip is connectivity and infrastructure," he has been quoted as saying by Reuters.
Baglay added that India, Afghanistan and Iran would separately sign an agreement to set up a trade and transport corridor during Modi's trip that will have Chabahar as the hub.
"The trilateral agreement will be a game changer for regional connectivity especially for Afghanistan which can find an assured and reliable alternate access to India via sea," Baglay added.
Located on the confluence of the Indian Ocean and the Sea of Oman in southeastern Iran, Chabahar is India's first foreign port project. Once completed, the project would enable India to send its goods from Chabahar to Afghanistan, Central Asia and beyond.
In May 2014, India and Iran signed a Memorandum of Understanding (MoU) to jointly develop the port once the international sanctions against Iran were lifted.
Both sides agreed as per the MoU to allow India lease two docks at the port for a period of 10 years, a move that was meant to cut India's crude oil and urea transportation costs by around 30 percent.
India is also relying on the prospects of establishing rail links from Chabahar to Afghanistan and thereon to Central Asia.
Talks over the project had been on, but since the scaling back of Western sanctions against Iran in January, India has pushed hard to implement it.
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