To make Chabahar a ‘Game Changer’ Central Asian states need to be roped in

Once again there has been a lot of hype about Chabahar becoming a strategic ‘game changer’ for India. Media reports had earlier highlighted the shipment of 1.1 million tonnes of wheat to Afghanistan through Chabahar port as India sending subtle messages to its friends and foes across the region. A fresh sense of excitement followed Iran’s commissioning of the first phase of the Shahid Beheshti terminal at Chabahar port on December 3. Indian strategic commentators have been quick to characterise Chabahar as India’s counterweight to Pakistan’s Gwadar Port, China’s Belt & Road Initiative and finally gaining easy access to Eurasian markets.

More interesting news followed with the Commissioner of the Central Board of Excise and Customs (CBEC) stating that the much touted International North-South Transport Corridor (INSTC), after languishing for nearly 15 years, would be operationalized next month. This will enable India to send its first consignment through the 7,200 km INSTC to Russia or Turkey via Iran on January 15, 2018.

The corridor is expected to cut the time and cost for transportation by half – thus helping India-Russia trade to grow from the current US $6 billion to 30 billion over the next 10 years.

But the fact remains that the CBEC Chief was making his point purely on the ground that India’s accession to the UN Convention on global transport and customs transit system for moving goods across international borders, also known as Transports Internationaux Routiers (TIR) convention, will soon come into effect. India had acceded to the TIR convention on June 15, 2017 and it normally comes into effect six months after the date of accession. This means, by mid-December, India hopes to use the TIR convention once it finds some trading intermediaries and logistics partners.

Iran is undoubtedly the ideal transit country for India to be the gateway to Central Asia and Russia as it gives ready access to a number of trade corridors (existing and planned). Chabahar in particular offers an attractive opportunity for India given the Iranian interest in building the port as a commercial hub. It is the only Iranian port on the Indian Ocean and has deeper draft compared to Bandar Abbas.

Chabahar has two terminals – Shahid Kalantari and Shahid Beheshti. The first terminal is handling about 2.1 million tonnes of cargo per year and, with the operationalization of the Shahid Behesti terminal, the capacity will increase to about 10 million tonnes. Iran has recently imported cranes from Germany for the first terminal jetty at Shahid Behesti where shipments of wheat from India has been recently offloaded and were trucked to Afghanistan. The cost of German-made cranes and equipment worth $85 million for the terminal was made through the Indian investment. India had earlier committed a $500 million line of credit to develop the port soon after the Iran nuclear deal went into effect in January 2016 and sanctions were lifted.

It seems that Shanghai Zhenhua Heavy Industries Co Ltd (ZPMC) will supply four gantry cranes to accommodate large container ships in the first 8.5 million-tonne jetty. Of course, more jetties will be added to increase the port’s capacity to 82-85 million tonnes.

The 2016 Trilateral Transit Agreement makes it incumbent on India to build and operate Chabahar Port (two terminals and five berths with cargo handling for 10 years). The MoU provides the necessary legal framework for trans-shipment of goods to Afghanistan.

According to some estimates, with the operationalisation of the Chabahar port and INSTC, India’s trade with Eurasia could grow rapidly up to $170 billion (60.6 billion export and 107.4 billion import).

With the commissioning of the Shahid Behesti terminal, a greater prospect now opens up for enlarging both the operational and practical scope of Chabahar to become a vital gateway and the shortest land route to access Central Asia. However, the further construction of a multi-purpose terminal at Chabahar including India’s plan to build a 610 km north-south railway (Chabahar to Zahedan) cannot be realised unless a Central Asian state, apart from Afghanistan, becomes a direct stakeholder in the port.

So far, connecting to Afghanistan has been essential for India to fulfil its strategic commitment. But for the route to be economically viable, reaching out to Central Asia becomes more imperative, for it is this region which houses the most strategic and high-value minerals including uranium, copper, titanium, ferroalloys, yellow phosphorus, iron ore, rolled metal, propane, butane, zinc, coking coal, etc. For example, Kazakhstan alone wants to increase its non-oil exports by 50 per cent by 2025. And, without a direct transport access, India cannot procure the Central Asian riches needed for its manufacturing economy.

India’s current trade with Central Asia is minimal at a little over $1 billion and is not growing much. The volume of trade with the region accounts for merely 0.11 per cent of India’s total trade. Similarly, India’s share in Central Asian total trade is only about one per cent. Only by improving transport connectivity can the prospect of commercial ties with the region be enhanced.

For the landlocked countries of Central Asia, Chabahar now becomes the shortest land route option to conduct their maritime trade. So far, they have been relying on seaport facilities in Turkey, Russia, Baltic States, Iran (Bandar Abbas) and China. Until recently, only the Kazakh operator, has expressed interest in constructing a terminal in Mundra (Gujarat). But, with the opening of Chabahar port, Uzbekistan sought access to the Indian Ocean through a deal with Afghan railways just two days after the Shahid Behesti terminal was inaugurated on December 3.

In 2011, the Uzbek state railway company, Ozbekiston Temir Yollari, built a short 75-kilometres single-rail link between Hairatan, a town on the Uzbek-Afghan border, and the Afghan city of Mazar-i-Sharif, at a cost $1.5 billion funded by the Asian Development Bank (ADB). Uzbekistan had been keen to extend the line to other parts of Afghanistan. However, the Salang Pass posed a major obstacle for connecting northern Afghanistan with Parwan Province and with onward connections to Kabul Province.

At the same time, the plan to extend the railway line (approximately 700-km) from Mazar-i-Sharif through the towns of Sheberghan, Andkhoy and Maymana to Herat in the west of Afghanistan has been under discussion between O’zbekiston Temir Yo’llari,and Afghan railways. Importantly, an agreement to complete the railway line has been signed between Uzbek President Shavkat Mirziyoyev and Afghan President Ashraf Ghani in Tashkent on December 5.

Herat is a gateway to Iran and once this trans-Afghan transport corridor project is completed, it will eventually enable both Afghanistan and Uzbekistan to get a direct link to sea ports and send cargoes to and from Chabahar.

In the backdrop of these developments, India now needs to look at the strategic role of Chabahar port for evolving an integrated transportation network involving both the INSTC and the proposed transit corridor to Central Asia from Chabahar. In fact, the Chabahar-Iranshahr-Zahedan-Mashad corridor is the most ideal route to connect to Sarakhs (Turkmen border). India has already committed to lay a railway track from Chabahar to Zahedan.

Chabahar port can be connected with INSTC if the line is further extended till Mashad. In fact, Chabahar-Iranshahr-Zahedan-Mashad can be linked to the existing Eurasian railway line which connects other parts of Central Asia. Similarly, this route can hook onto ongoing corridor plans and programmes like Transport Corridor Europe-Caucasus-Asia (TRACECA), Central Asia Regional Economic Cooperation (CAREC) and other multilateral transport initiatives in the region.

India could tie up the loose ends of connectivity projects with Central Asia through both bilateral and multilateral mechanisms. So far, India has completed the 218-km road from Delaram in Afghanistan to Zaranj at the Iran-Afghanistan border. 

When it comes to Eurasia, container transport plays a significant role, and for India to join the competitive situation in the Euro-Asian transit system, active participation in transportation projects becomes essential. India’s connectivity approach need not be limited to increasing trade and commerce but should aim to enhance investment and services, interlinking sources of raw-material, centres of productions and markets between India and Eurasia.

For example, a Free Trade Agreement (FTA) between India and Eurasian Economic Union (EAEU) could spur the unhindered flow of raw-materials as well as inflow of capital and technology through new industrial infrastructure along Chabahar and INSTC routes.

India’s decision to accede to the Ashgabat Agreement that aims to build an international multimodal transport and transit corridor facilitating transportation of goods between Central Asia and the Persian Gulf is a step in the right direction. As noted earlier, India has already acceded (on June 19, 2017) to the Customs Convention on the International Transport of Goods Under Cover of TIR Carnets (TIR Convention, 1975) which is used for international carriage of goods. TIR Carnets provide the principal security for movement of transit cargo. It is an internationally recognised harmonised customs transit document that accompanies the truck driver and the cargo across customs points from origin to destination. TIR facility is cost-effective. It reduces administrative and financial burdens with one international guarantee for a transport operator, replacing costly guarantees in each country of transit.

TIR journeys have become even faster and more efficient with IRU’s TIR-EPD, a free-of-charge web-based digital platform with applications available in 18 languages that allows transport operators to send advance information on goods transported under the TIR procedure. The eTIR system gives real-time data availability, online monitoring, improved reliability and flexible guarantees. Central Asian states are already members of the TIR Convention.

All of these initiatives along with the Chabahar operation should stir enthusiasm among Indian companies to join various international transport corridors in Eurasia. But more significantly, the Chabahar link would singularly make Afghanistan as the most important regional transportation hub and a bridge connecting the Indian Ocean and Central Asia. Afghanistan shares borders of 137, 744 and 1,206-kilometres with Uzbekistan, Turkmenistan and Tajikistan, respectively. However, trade among the three countries has remained very low due to poor transport infrastructure. The construction of railway tracks would enable Afghanistan to play the bridging role for integrating the Central Asian region with global markets. The Asian Development Bank (ADB) had earlier estimated that an improved transportation link between Central Asia and Afghanistan will boost regional trade by up to $12 billion.

Way Forward

In the next stage, India needs to rope in one or more of the Central Asian countries, preferably Uzbekistan and Kazakhstan, in the Chabahar project and this could also be pursued under the SCO framework. Apart from this, India should focus on the following priority areas:

1. Take early operational control of Chabahar,
2. Facilitate regular and frequent shipping links between the ports in India (Mundra, Kandla & Mumbai) and Chabahar,
3. Envisage extending the Chabahar-Zahedan-Mashad rail link up to Herat in Afghanistan.
4. Consider taking part in the Uzbek-Afghan initiative to connect Mazar-i-Sharif with Herat. (According to Uzbek Railway officials, the Joint-stock Company O’zbekiston Temir Yo’llari has full capacity to undertake the building of 100 kilometres of rail line every eight months. The cost of the project is estimated to be less than $2 billion).

An early realisation of a trans-Afghan rail corridor connecting Chabahar with Central Asia would bring about the biggest breakthrough in Asian transport connectivity with enormous implications for the entire region both in terms of spurring economic prosperity and ensuring political stability. However, Iran is unlikely to allow Chabahar to become a pivot of regional rivalry. Tehran has already sent a compelling message, this time by inviting Pakistan’s Minister for Maritime Affairs Mir Hasil Khan Bizenjo to the inauguration ceremony who not only hailed Chabahar port as a welcome sign for the entire region but also designated it as the sister port of Gwadar.

P. Stobdan served as Ambassador in Central Asia and is currently a Senior Fellow at IDSA, New Delhi.

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.