December 12, 2017
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:
Take early operational control of
Chabahar,
Facilitate regular and frequent
shipping links between the ports in India (Mundra, Kandla & Mumbai) and
Chabahar,
Envisage extending the
Chabahar-Zahedan-Mashad rail link up to Herat in Afghanistan.
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.
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