The port project has already garnered a commitment of $85 million from the Indian government and is seen as a rival to China’s recently announced involvement in Pakistan’s Gwadar port.
The Indian government is reported to have committed $22.9 million per year for ongoing port operations under a proposal will see the port operated via an Indian JV company, composed of Jawaharlal Nehru Port Trust (JNPT) and the Kandla Port Trust (KPT), which will sign a 10 year leasing agreement.
India is keen to increase its presence at the Chahbahar port in order to give it a sea-land access route into Afghanistan through Iran’s eastern borders.
Located in the Sistan-Baluchistan Province on Iran's south-eastern coast the port should prove to be of strategic importance to India which is keen to open up trade routes to Afghanistan.
Competition in the region is rapidly heating up though as China announced plans this month to invest $622 million to develop the deepwater Port of Gwadar in Pakistan. The investment in the strategically important port is part of a much larger $45.6 billion commitment by China to create a rival transport corridor.
Although Gwadar currently has only the most basic road and rail links with the rest of Pakistan as much as $10 billion of China’s investment will be used to boost multi-modal connections.
To balance this India and Iran have proposed an inter-Governmental Memorandum of Understanding (MoU) to create a state-of the- art container terminal and multi-purpose cargo terminal at Chabahar in the east of Iran.
A potential phase II development of the port may see further cooperation between India and Iran on a BOT basis subject to satisfactory performance in Phase I.
Road links from the port connect Chahbahar to Zaranj some 883 km and from there Afghanistan's garland highway which allow access to for goods to the country’s four major cities; Herat, Kandahar, Kabul and Mazar-e-Sharif.