India says Iran's Chabahar port will benefit all after US warns of sanctions

The project will help India boost trade with Central Asian nations and Europe, bypassing Pakistan

The Chabahar Port in Iran. Alamy

An agreement with Iran to develop its Chabahar port will benefit all, India's Foreign Minister Subrahmanyam Jaishankar has said, responding to a US warning of potential sanctions.

India signed a 10-year agreement to run the strategic port in Iran, Mr Jaishankar said, emphasising that people should be open to the project.

It is a "question of communicating and convincing and getting people to understand that this is actually for everybody’s benefit," he said at the launch of a Bengali version of his book Why Bharat Matters in Kolkata on Wednesday.

The port will help the partners promote trade with landlocked Central Asian nations and Europe, bypassing Pakistan. India shares a tense relationship with its neighbour.

India’s Shipping Minister Sarbananda Sonowal called it a "historic moment in India-Iran ties”.

However, the US warned the agreement could risk India being sanctioned for deals with Iran.

The deepwater port in Sistan-Balochistan province in southeastern Iran will provide an alternative for trade between Iran, India and Afghanistan.

“I don’t think people should take a narrow view of it and they have not done so in the past,” Mr Jaishankar said.

“If you look at the US’ own attitude to Chabahar in the past, the US has been appreciative of the fact that Chabahar has a larger relevance. So, we will work at it.”

Mr Jaishankar’s comments followed a US warning to New Delhi that it would also potentially face the risk of sanctions on anyone considering business deals with Tehran.

The US has imposed more than 600 sanctions on Iran and Iranian-affiliated entities.

“I would let the government of India speak to its own foreign policy goals, vis-à-vis the Chabahar Port as well as its own bilateral relationship with Iran,” Vedant Patel, principal deputy spokesperson for the US State Department, said in a press briefing.

“Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk they are opening themselves up to, potential risk of sanctions," Mr Patel said.

Signing ceremony of the Chabahar port project in Tehran on May 13. Tasnim

India will invest about $120 million, with an additional $250 million in financing the port.

So far, 2.5 million tonnes of wheat and 2,000 tonnes of pulses have been shipped from India to Afghanistan through Chabahar port, according to media reports.

The port and the allied road network are considered a rival project to China’s Belt and Road initiative.

New Delhi has not joined the Belt and Road project and has staged protests over the multi-billion-dollar initiative as it passes through parts of the disputed Kashmir region under Pakistan's control that India claims as its own.

New Delhi also considers Beijing’s initiative as a threat to its security, with China expanding its economic and military influence across the Asia-Pacific region.

The US has viewed India as a partner to contain Chinese influence in the region.