India has been developing part of the port in Chabahar on Iran’s southeastern coast to export goods to Iran, Afghanistan, and central Asian countries while bypassing Pakistani ports in Karachi and Gwadar. India and Pakistan have been enemies since the partition of British-occupied India created the Muslim state of Pakistan in 1947.

Thus far, India has managed the Chabahar port under short-term contracts, which must be renewed regularly. The uncertainty about future operations this has caused, and the complications of engaging in trade with Iran due to US sanctions, has discouraged significant investment in the port.

“As and when a long-term arrangement is concluded, it will clear the pathway for bigger investments to be made in the port,” Indian Foreign Minister S Jaishankar told reporters in Mumbai.

A source speaking with Reuters said Indian Shipping Minister Sarbananda Sonowal is traveling to Iran to witness the signing of a “crucial contract” that would ensure a long-term lease of the port to India.

The contract is expected to last ten years and will give India management control over a part of the port.

Expanded trade via the Chabahar port will help India expand trade to both central Asia and Europe. 

Business Standard reports that Chabahar is also part of the proposed International North–South Transport Corridor (INSTC), a mixed sea and land transport route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and onward to northern Europe via Saint Petersburg in Russia.  

Exporting goods through the INSTC via Chabahar Port is expected to reduce transit times between India and Europe by 15 days compared to the Suez Canal route.

Chabahar will also allow Iran to bypass US sanctions and allow Afghanistan better access to the Indian Ocean.

US sanctions on Iran have similarly delayed construction of a pipeline to transport Iranian natural gas to energy-stricken Pakistan.

The stalled pipeline deal, signed in 2010, envisaged the supply of 750 million to a billion cubic feet per day of natural gas from Iran’s South Pars gas field to Pakistan for 25 years.

Last month, Islamabad said it would seek a US sanctions waiver to proceed with the pipeline. However, US officials publicly said they did not support the project and warned Pakistan about the risk of sanctions in doing business with Tehran.