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Daily News Analysis

Iran drops India from Chabahar rail project, cites funding delay

14th July, 2020 International Relations


  • The Iranian government has decided to proceed with the construction on a rail line from Chabahar port to Zahedan, along the border with Afghanistan on its own, citing delays from the Indian side in funding and starting the project.


  • Iranian minister inaugurated the project by himself.
  • The entire project would be completed by March 2022.
  • Iranian railways will proceed without the Indian investment.
  • Use approximately $400 million from the Iranian National Development Fund.

About the Project:

  • Part of commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.
  • Signed the MoU in 2016 under the Chabhar agreement.
  • The MoU was to construct the Chabahar-Zahedan railway as “part of transit and transportation corridor in trilateral agreement between India, Iran and Afghanistan.
  • IRCON, Indian company was to provide all services, superstructure work and financing for the project (around $1.6 billion).


  • India never began the work, fearing US sanctions.
  • However, US provided sanction waiver for the development of Chabahar Project and Railway line but it is difficult to find equipment suppliers and partners as they could be targeted by the U.S.
  • China is already finalising a 25 years deal.

Proposed Railway Line:

About Chabahar Port:


  • Signed in 2015 between India and Iran.
  • India was to develop the Chabahar Port.

Location of Chabahar Port:

  • Located in Gulf Of Oman.
  • Only Oceanic port of Iran..

Importance for India:

  • Enhanced trade with Afghanistan and Central Asia by bypassing the Afghanistan.
  • Access to the International North-South Transport Corridor that has sea, rail and road routes between India, Russia, Iran, Europe and Central Asia.
  • Counter Chinese Presence in Arabian Sea.
  • Significant boost in the import of iron ore, sugar and rice to India.
  • Establishment of sustainable connectivity with Afghanistan.
  • Point to coordinate humanitarian assistance across the Middle East.

Reference: https://www.thehindu.com/news/national/iran-drops-india-from-chabahar-rail-project-cites-funding-delay/article32072428.ece