India has signaled its intent to press ahead with development of the Chabahar port in Iran with the allocation of Rs100 crore in the budget of the Indian foreign ministry. The port is of strategic significance to India given that New Delhi sees it as the route to access landlocked Afghanistan and Central Asia bypassing Pakistan.
In the budget for 2020-21 announced on Saturday, Finance Minister Nirmala Sitharaman has earmarked Rs17,372.27 crore for the Indian foreign ministry, marginally lower than what was allocated in the 2019-20 budget in which the ministry was allocated Rs17,346.71 crore. The reduction in budget outlay was most significant for Nepal, where the reduction has been Rs400 crore – from Rs1,200 crore in the 2019-20 budget to Rs800 crore in the 2020-21 budget.
In the case of Chabahar, the allocation has gone up by Rs55 crore from Rs45 crore in the 2019-20 budget. This comes more than two months after the US gave India a written assurance that it would help facilitate global banks to fund the purchase of equipment at Chabahar port — during the Indo-US “2+2″ meeting of foreign and defense ministers in Washington in December. The US had then included a confirmation of the special exemption to the development of the Chabahar port and a rail link from America’s Iran sanctions, provided there was no involvement of Iran’s Islamic Revolutionary Guard Corps.
Analysts in New Delhi say the allocation of resources for Chabahar port is a signal to both Iran and Afghanistan that India is committed to the project first agreed to in 2003.
Getting Indian companies to undertake any activity at Chabahar has been a non-starter given that Indian firms have been nervous of US sanctions despite assurances that India had won a carve-out from the US on developing the Iranian port.
