KPT and JNPT to Put Up $85mn for Two Terminals and Three Berths in Chabahar Port

· Rival to China Supported Gwadar Port in Pak

· India Moves towards Iran as US Loosens Sanctions

· Entry into Afghanistan and Central Asia thru Iran Proposed

· Energy Intensive Investments in Free Trade Zone

The most noteworthy of the 12 agreements signed between Modi and Iranian President Hassan Rouhani is India’s investment of $500 million into developing Iran’s Chabahar port, considered an important entrepôt leading to Afghanistan and onward to Central Asia. Afghan President Ashraf Ghani also later joined the two leaders to sign a trilateral transit agreement that will significantly ease the passage of goods between the three countries and boost trade.

Modi’s visit to Tehran is the first by an Indian Prime Minister since 2012, with both countries keen to capitalize on the lifting of U.S. sanctions last year. India is one of the largest importers of Iranian crude oil but built up a $6.5 billion backlog of payments during the sanctions. India’s role in the global condemnation of Iran’s nuclear program also soured the bilateral relationship.

Chabahar is located near the Iran-Pakistan border, and is a little over 60 miles from the Pakistani port of Gwadar that is being developed by the Chinese. The proposed transit route through Iran and Afghanistan also appears to be a response to the $45bn China-Pakistan Economic Corridor (CPEC) announced last year.

India Ports Global Pvt, a joint venture of the Jawaharlal Nehru Port Trust and the Kandla Port Trust, will invest USD 85 million in developing two container berths with a length of 640 metres and three multi cargo berths.

The Indian consortium has signed the port pact with Aria Banader Iranian.

The Iranian President Rouhani pointed out the challenges arising out of banking channels, which is preventing India from paying the full $6 billion of past dues from oil exports.

Other potential partnerships inked by the two countries include the construction in Iran by India’s National Aluminium Co., investment in an Iran-Afghanistan rail line by Indian state-run engineering company IRCON and several other strategic and cultural exchanges.

Key Agreements/MOUs signed during the visit of Prime Minister to Iran (May 23. 2016)

S.No	Title of MoU	Description	Signatory from Indian side	Signatory from Iran side
1.	Bilateral contract on Chabahar Port for port development and operations between IPGPL [India Ports Global Private Limited] and Arya Banader of Iran	The contract envisages development and operation for 10 years of two terminals and 5 berths with cargo handling [multipurpose and general] capacities.	Shri Arun K Gupta, Managing Director, IPGPL.To be Counter-signed by H. E. Mr. Alok Srivastva, Additional Secretary, Ministry of Shipping of India	Mr. Ebrahim Yaseri, Managing Director of Arya Banader To be countersigned by H. E. Mr Saeednejad, Chairman of Ports and Maritime Organization of Iran.
2.	MoU between EXIM Bank and Iran’s Ports and Maritime Organization [PMO] oncurrent specific terms for the Chabahar Port project	This MoU is intended for the purpose of credit of USD 150 million for Chabahar port.	Mr. Yaduvendra Mathur, Chairman, EXIM Bank	H. E. Mr Saeednejad, Chairman of Ports and Maritime Organization of Iran.
3.	Confirmation Statement between EXIM Bank and Central Bank of Iran	This confirms the availability of credit up to INR 3000 crore for the import of steel rails and implementation of Chabahar port.	Mr. Yaduvendra Mathur, Chairman, EXIM Bank	Mr. Gholamali Kamyab, Vice Governor of Central Bank of Iran
4.	MoU between ECGC [Export Credit Guarantee Corporation] Limited of India and the Export Guarantee Fund of Iran (EGFI)	The MoU seeks to establish a framework of cooperation between ECGC and EGFI in supporting and encouraging foreign trade and foreign investment between India and Iran and, where appropriate, the supply of goods and services from their respective countries as part of a project to a third country.	Ms Geetha Muralidhar, Chairman & Managing Director, Export Credit and Guarantee Corporation of India.	Mr. Seyed Kamal Seyed Ali, Chairman and CEO of Export Guarantee Fund of Iran
5.	MoU between National Aluminium Company Limited (NALCO) and the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO)	The objective is for the two parties to jointly explore the possibility of manufacturing aluminium metal by setting up of a smelter on joint venture basis in Iran and/or entering into tolling arrangements with smelters in Iran or any other form of business collaboration including sale of alumina etc.	Dr T K Chand, CMD, NALCO.	Mr. Mehdi Karbasian, Head of IMIDRO.
6.	MoU between IRCON and Construction, Development of Transport and Infrastructure Company (CDTIC) of Iran	MoU will enable IRCON to provide requisite services for the construction of Chabahar-Zahedan railway line which forms part of transit and transportation corridor in trilateral agreement between India, Iran and Afghanistan. Services to be provided by IRCON include all superstructure work and financing the project (around USD 1.6 billion).	Mr. Mohan Tiwari, Managing Director of IRCON	H. E. Mr Pourseyed Aghaei, Deputy Minister for Railways of Iran

Iran India PTA and DTAA

President Rouhani and Prime Minister Modi agreed to strengthen the longstanding trade ties between the two countries by, inter alia, stepping up the momentum of economic engagement through early conclusion of a Preferential Trade Agreement, preferably within a year. The two leaders also directed that Double Taxation Avoidance Agreement and Bilateral Investment Treaty should be concluded before the end of the year.

India fully supports the accession of the Islamic Republic of Iran to the World Trade Organization and the ongoing consensus building efforts among WTO members to reactivate the accession process, consistent with the objective of making the Organization universal and inclusive.

Recognising the key role of effective banking channels for affecting business transactions, both sides welcomed technical discussions between two central banks, hoped for an early conclusion of practical arrangements on the same.

Noting the recent exchanges of business delegations between the two countries and the significance of such exchanges for promoting economic and commercial cooperation, President Rouhani and Prime Minister Modi welcomed the decision of the Confederation of the Indian Industry (CII) to open a regional office in Tehran.