Disputes over an arbitration clause are the only thing standing between India and Iran and a long-term agreement for operations at the important Chabahar port, according to sources familiar with the situation.

The 10-year deal, which will automatically renew, is intended to replace a previous arrangement that covered India’s operations at the Shahid Beheshti terminal in Chabahar port and was renewed annually.

The decision was made at a time when Iran has been pressuring New Delhi to speed up development of the Shahid Beheshti terminal, which is run by the government-owned India Ports Global Limited, and China has been expressing increasing interest in investing in ports and other coastal infrastructure in Iran (IPGL).

The long-term deal came up in conversation during Sarbananda Sonowal’s visit to Iran last month, particularly during his meeting with Rostam Ghasemi, the Iranian minister of urban development.

According to the people, the minor difficulty impeding the long-term agreement is the jurisdiction for arbitration of disputes on any matter. They noted that a proposal under the agreement would require a tough constitutional amendment because such arbitration cannot be referred to foreign courts under Iran’s Constitution.

However, given that legal and technological specialists are working on it, the parties are optimistic that this issue will be resolved quickly, according to the persons.

The Iranian side has also been pressuring India to complete the 700 km Chabahar-Zahedan railway line and expedite the expansion of its activities at the Chabahar port.

Less than 200 kilometres of this vital rail link still need to be built, and Tehran has suggested that an agreement can be finalised by the Indian side with another organisation in response to concerns about working with a construction firm that has ties to the US-sanctioned Islamic Revolutionary Guard Corps.

The IPGL has handled more than 4.8 million tonnes of bulk cargo since it started operating at the Shahid Beheshti terminal in late 2018, including transshipments from Australia, Bangladesh, Brazil, Germany, Russia, and the UAE. Experts predicted that this number could increase significantly if the port is connected to the rail network.

In May 2016, India began construction of the Shahid Beheshti terminal as part of a Chahbahar tripartite deal with Iran and Afghanistan. Since the Taliban overran Afghanistan last year, Afghanistan is effectively no longer a part of the agreements, albeit the port has benefited from a US waiver on sanctions placed on Iran.

India promised to contribute $85 million to the terminal’s construction and has already contributed cranes and other equipment totaling about $24 million. People made the point that it is imperative to hasten the supply of additional machinery, such as powerful gantry cranes, for transporting cargo from ships to land.

The two nations decided to establish a cooperative technical committee for the efficient operation of the port during Sonowal’s visit. In order to realise the objective articulated during Prime Minister Narendra Modi’s 2016 visit to Iran, India is still “totally committed” to developing the Chabahar port, Sonowal stated at the time.

In order to encourage the use of the port, India is planning to host a conference of a joint working group on Chabahar with Central Asian states in October, the sources added. Incorporating the port into the International North-South Transport Corridor is another initiative (INSTC).

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