Chabahar Railway Project: China In,India Out

A major foreign policy setback for India regarding Chabahar Railway Project .Iran has decided to drop India from strategic Chabahar Railway Project by citing India’s delay in funding.Let’s analyse the topic.

Chahabar Railway Project: China In India Out


What is Chabahar Railway Project?

  • The Chabahar Railway Project was the strategic part of India’s commitment to the trilateral agreement including Afghanistan and Iran to build an alternate trade route to Central Asia through Afghanistan. As other routes are blocked either by Pakistan or China.
  • The Chabahar Railway Project deal came into action when Prime Minister Narendra Modi visitied to Tehran in 2016.
  • The Chabahar Railway Project was supposed to be executed by Indian Railways Construction Ltd (IRCON). And Indian Railways Construction Ltd had promised assistance worth $1.6 billion.
  • However, the work could not be started since 2016 as United States imposed sanctions on Iran.

Know about Indian Railways Construction Ltd 

  • Indian Railways Construction Ltd functions under Central Government (Ministry of Railways)
  • Indian Railways Construction Ltd was incorporated under under the Companies Act, 1956
  • Indian Railways Construction Ltd is in operation since 28th April, 1976
  • Indian Railways Construction Ltd is the leading turnkey construction company in the public sector.
  • IRCON has it’s widespread operation not only in India but also in other countries like Malaysia, Nepal,Bangladesh,Ethiopia, Afganistan, U.K, Algeria,Srilanka etc.

Strategic Significance of Chabahar Railway Project

The Chabahar port is situated in the South-East Iran on the Arabian Coast.

Chahabar port

  • Chabahar Port is situated near the strategic choke point i.e strait of Hormuz. Strait of Hormuz is the passage of all oils shipments from Gulf countries. It is the connector between the Indian Ocean and Mediterranean sea.
  • The import cost of oil to India from Gulf Countries will significantly decrease.
  • Chabahar port is very near to Gwadar port in Baluchistan province of Pakistan. Gwadar port is the part of China led CPEC corridor. Gwadar port is 400 km away from Chabahar by road and 100 km by sea.
  • Chabahar Port is strategic as it works as the gateway to Afghanistan and Central Asia for India bypassing Pakistan.
  • Chabahar Port is instrumental as India can counter Chinese presence in the Arabian Sea.
  • Chabahar port could be used as a key checkpoint from where humanitarian operations could be coordinated and monitored in the Central Asia.
  • India enjoys very close political and strategic relations with Afghanistan and as well as all the Central Asian countries. India is eyeing a sustainable trading relationship with these oil rich countries. Chabahar port is the key in India’s grand and ambitious plan to establish a bridge with Afghanistan and Central Asian countries.
  • The proposed railway route passes through Zahedan, a city at the border of Iran and Afghanistan and Zaranj, a Afghanistan border town to Kabul. Zaranj is a part of Zaranj Delaram Highway project which is already constructed by India in 2009.India is expecting to expand the route up to the Central Asian countries as well in the future.
  • Observing such strategic importance India has already invested billions of dollars over Chabahar Port and Chabahar Railway Project over the past few years. India, Iran and Afghanistan also came out with a trilateral pact regarding investment in Chabahar Port and Chabahar Railway Project.

India’s Obligations

As per Pakistan-Afghanistan Transit Trade agreement, Pakistan is allowing Afghanistan to export goods to India. Pakistan is bound to promote Afghani exports. So it means there is a land based export route from Afghanistan to India. But Pakistan would definitely not grant access to Indian export to Afghanistan. Even if Pakistan allows Indian exports, it will remain as highly volatile and vulnerable route considering the frequent armed tension in between India and Pakistan. Because whenever there is a border tension or Kashmir issue flairs up,Pakistan could take this trading route as a leverage against India.

Apart from American sanctions this was the one of the main reasons why India pulled out from the proposed Iran-Pakistan-India gas pipeline.

Recent Developments and Concerns for India

  • Iran has finalized an economic and security partnership deal with China. The deal is worth $400 billion.
  • The deal will be resulting a vast expansion of Chinese presence in various sectors of Iran including banking, telecommunications, highways, railways and other projects.
  • India is always been a strategic ally of Iran, the deal could hurt India’s ambitious prospects in the region, especially at a time when India’s relations with China have soured further in the border standoff and Chinese application ban issue.

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Why Did Iran Drop India

This decision could be related to the ongoing geo-politics involving USA-IRAN-INDIA-CHINA. Iran is already placed under Economic Sanctions by USA which is assertively looking to cripple Iran’s Nuclear Weapons Programme. However, it is also to be noted that India and China both heavily depends on Iran for oil imports. India and Iran jointly was working on bringing stability in Afghanistan as the continuous instability and extremism in Afghanistan was a threat to the trading interest of both the countries. This strategic partnership dismantled when Iran faced sanctions from USA for the first time in 2010. Since then India is trying to balance both the sides i.e Iran and USA, keeping India’s energy security under it’s top priority. As a result Iran granted permission to India to use Chabahar Railway Project. The sanctions on Iran was lifted when Iran Nuclear Deal or Joint Comprehensive Plan of Action (JCPOA) was signed and this brought a great relief to India. But Donald Trump decided to pull out from Iran Nuclear Deal and reimposed sanctions on Iran. Since the USA started to exert pressure to all the countries that imports oil from Iran including India. India not only reduced oil imports but also India zeroed-out oil imports from Iran. India also reduced the funding on Chabahar port and the Chabahar Railway Project aftermath of USA sanctions. After that India gained an exemption from USA sanctions but then India faced another crisis. India started to experience difficulty to pick equipment suppliers who were worried about potential actions from the US side.

So in the eyes of Iran India has succumbed under the sanctions of USA and not only India has failed to protect the trading relationship with Iran but also India failed to deliver the committed project in time.

Apart from that India’s recent bonding with USA could play the key role in Iran’s decision. Iran stood up with Pakistan,Malaysia,Turkey and voiced against abrogation of Article 370. Iran also started raising voice against “human right violation in J&K” but at last stood up with China who is blamed for violations of human right against Uighur Muslims.


Iran’s desperation amidst sanctions of USA and China’s possible retaliation to India by poisoning one more ally of India are the major points to focus on.India must learn from this chapter. Therefore India can not take its allies for granted and India should reconsider it’s policy on allies keeping eye on next potential move of China’s expansionist policy.

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