Exim Bank will provide a credit of Rs150 million to the Islamic Republic of Iran for development of the Chabahar port outside the Persian Gulf to help expand maritime trade from the region.
The union cabinet chaired by Prime Minister Narendra Modi on Wednesday gave its approval to the proposal of the ministry of shipping for provision and operationalisation of the $150 million line of credit.
India is pushing for the Chabahar Port project, which will facilitate growing trade and investment with Iran and other countries in the region, notably Afghanistan and also to provide opportunities to Indian companies to penetrate and enhance their footprint in the region (See: India to participate in development of Iran's Chahbahar port).
India and Iran had signed an MoU on 6 May 2015 under which India had agreed to equip and operate two berths in Chabahar Port Phase-I, with capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a ten-year lease.
Ownership of equipment will be transferred to Iran on completion of 10-year period or for an extended period, based on mutual agreement.
Iran had requested for credit of $150 million in accordance with the MoU. As per the MoU, operation of two berths will commence within a period of maximum 18 months after the signing of the contract.
The two berths will be operated by the India Ports Global Private Limited, a company promoted by the Jawaharlal Nehru Port Trust and Kandla Port Trust - two major ports working under the ministry of shipping.
The union cabinet has now authorised the ministers of finance, external affairs and shipping to approve the final contract with Iran and for resolution of any issue arising in implementation of the project.
The cabinet has also authorised the ministry of shipping to form a company in Iran for implementing the Chabahar Port Development Project and related activities.