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India to sign Chabahar port contract during Modi's visit on 23 May

20 May 2016

India, Iran and Afghanistan will on Monday sign an agreement for development of the Chabahar port in Iran's southern coast as a strategic port. The agreement to be signed during Prime Minister Narendra Modi's visit to Tehran on 22-23 May, will help India build a transit corridor to Central Asia and Afghanistan.

Indian Ports Global Pvt Ltd will sign a contract with Arya Bandar Company of Iran for developing two terminals and five multi-cargo berths in Phase-1, said Gopal Baglay, joint secretary (Pakistan-Afghanistan-India) in the ministry of external affairs.

Under the deal, India will develop two terminals and cargo berths at Chabahar, on the Gulf of Oman.

The agreement, to be signed in the presence of Modi, Iranian President Hassan Rouhani and Afghan President Ashraf Ghani on 23 May, will be the main agenda of the Indian prime minister's two-day visit, sources said.

Baglay said India, Afghanistan and Iran would separately sign an agreement to set up a trade and transport corridor, with Chabahar as the hub, during Modi's trip.

The establishment of a transit-transport corridor with Chabahar port in Iran's Sistan-Baluchistan province at its heart will allow Afghanistan to bypass Pakistan for trade with India. It will also allow India and Afghanistan to access new markets in the Central Asian republics.

India will make an initial investment of over $200 million in the port, of which India's Exim Bank would provide a credit line of $150 million, Baglay said.

"The focus of the trip is connectivity and infrastructure," he told reporters.

The transit and transport corridor project will help construct road and rail links helping landlocked Afghanistan to get access to the Iranian port as an alternate to the Pakistani Karachi port.

"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 said.

Chabahar is about 100 km from Pakistan's Gwadar seaport, which China is developing as part of a $46 billion China-Pakistan Economic Corridor.

Talks to build the Chabahar port have been on for years but the countries had to wait for the scaling back of Western sanctions against Iran. India has since pushed hard for the project so as not to lose out to China, which is also keen to invest.

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