India extends 40% discount on ocean cargo to Iran's Chabahar Port by one year
19 October 2020
The ministry of shipping has extended the current concessional rate of 40 per cent discount for coastal movement of cargo and vessel related charges, for a further one-year period to clients for cargo being handled at Jawaharlal Nehru Port and Deendayal Port from/to Shahid Beheshti Port, Chabahar, Iran.
The levy of concessional Vessel Related Charges (VRC) is to be applied proportionately, subject to vessel loading at least 50 TEUs or 5,000 MT cargo to Shahid Beheshti Port.
The ports in coordination with Indian Ports Global Limited will jointly evolve a Standard Operating Procedure (SOP) to ensure that discounts are given to cargo actually discharged or loaded at Shahid Beheshti Terminal of Chabahar Port.
The aim of the extension of discount period is to promote the trade through Shahid Beheshti Port of Chabahar, Iran. It would give a boost to coastal movement of cargo being handled at Jawaharlal Nehru Port and Deendayal Port from/to Shahid Beheshti Port.
India’s trade ties with Iran has been impacted by US-led sanctions on the Islamic Republic while China has taken advantage of this to boost ties with Iran. India’s trade with Iran has significantly fallen after the US-led sanctions while China’s trade with Iran continued unhindered.
In 2018-19, bilateral trade between India and Iran was estimated at over $17 billion (mineral oil and fuel imports accounted for a significant percentage of the sum). In 2019-20, during April-November, bilateral trade was estimated at $3.5 billion. There was a significant drop in Iran’s imports from India, owing to the reduction of Iranian petroleum imports by India to zero.
2019 witnessed a downward trajectory as far as New Delhi-Tehran ties were concerned, with Iran expressing its disappointment with New Delhi for not taking a firm stance against Washington.
Iranian foreign minister Mohammad Javad Zarif in 2019 while making the above point in an interaction with Indian journalists also stated that ‘if India cannot lift oil from Iran, Indian rice will not be bought by Iran also.
The US has exempted the strategically important Chabahar Port project, India’s gateway to Afghanistan, from sanctions.
The port was earlier touted as India’s counter to Gwadar Port in Balochistan Province, Pakistan, which is at a distance of 70 km and an important component of the China-Pakistan Economic Corridor. The government of India had taken over phase 1 of Shahid Beheshti Port in December 2018 whereby, according to an agreement, India was to operate two berths within phase 1 of the project.
During the Covid-19 pandemic, India had used Chabahar Port to deliver relief materials to Afghanistan.
After India’s decision to stop the purchase of oil from Iran and the souring of ties between both countries, Iran had given indicators that it was keen to get Pakistan (Iran had proposed to connect Chabahar Port with Gwadar Port) and bring China on board.
Iran had also complained that progress on Chabahar Port was slow, due to India’s cautious attitude toward the project, as a result of US pressure, and delays in funding.
In the aftermath of the Iran-China 25-year agreement, India has been paying greater attention to ties with Iran in general, and the Chabahar Project in particular, a point strongly reiterated by the back-to-back visits of India’s defence minister Rajnath Singh and external affairs minister S Jaishankar to Tehran.
Connectivity, economic linkages and issues of regional security, specifically Afghanistan, were discussed during both visits.