Iran drops off India from Chabahar Rail Project

Published: July 14, 2020

On July 14, 2020, the Iranian Government announced that it is to move ahead with construction of rail line from Chabahar port to Zahedan on its own. According to the Iranian Government, the decision was taken due to the delays in funding for the project from Indian side.

Highlights

The Iranian Government is to complete the project by 2022 without assistance from India. The project is to be implemented with funds from Iranian National Development Fund.

About the project

The Railway line was finalised in May 2016 when PM Modi visited Tehran in 2016 to sign Chabahar agreement with Afghanistan and Iran. The rail line is to be constructed along the border of Afghanistan.

The three countries agreed to build a trade route to Afghanistan and Central Asia. The Government owned IRCON (Indian Railways Construction Limited) was to implement the project at 1.6 billion USD.

India’s Concerns

India was to use the route to by-pass Pakistan. Through Chabahar, India had planned to reach Central Asian countries.

The China Factor

China has a major role in Iran droping off India from the project. It is to be noted that China and Iran recently signed economic and military partnership of 400 billion USD. The agreement would expand Chinese hands in banking, railways, telecommunication, ports and several other projects in Iran.

In exchange, China is to receive oil supply from Iran at heavily discounted rates for the next 25 years.

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