India plans ₹4,000 crore investment to expand Chabahar Port capacity to 500,000 TEUs in 10 years, boosting regional trade links.

In a significant push to strengthen India’s strategic and economic interests in the region, the government has unveiled a ₹4,000 crore capital expenditure plan to expand operations at Iran’s Chabahar Port. This investment aims to increase the port’s capacity fivefold to handle 500,000 TEUs (twenty-foot equivalent units) over the next decade.

Modernisation and Expansion Efforts

As part of the expansion strategy, orders for five mobile harbour cranes have already been placed. These cranes are a crucial step toward berth modernisation, with delivery expected over the next three to five years. Additionally, plans are underway to develop a second berth to further enhance the port’s operational capabilities.

The port’s capacity is projected to reach nearly 100,000 TEUs by FY26, a sharp rise from its expected handling of 75,000 TEUs in FY25. Notably, the port has already crossed 65,000 TEUs by the end of January FY25, surpassing the FY24 figure of 64,245 TEUs and showing steady growth from just 9,126 TEUs in FY23.

“The port remains in ‘investment mode,’ with focused efforts to bring Indian shipping lines into operations soon,” stated an official from the Shipping Ministry. Marketing activities are being actively pursued to ensure the port’s operational and commercial viability.

Strategic Importance of Chabahar Port

Chabahar Port holds immense geopolitical and economic significance for India. It serves as a critical gateway, connecting Mumbai to Eurasia via the International North-South Transport Corridor (INSTC). This reduces transport costs and time, making it an alternative trade route to bypass Pakistan.

India’s Economic Survey 2024-25 highlights that Shahid Beheshti Port at Chabahar witnessed a 43% increase in vessel traffic and a 34% rise in container traffic in FY24, underscoring its growing importance in regional trade.

Financial and Logistical Investments

India is making significant financial and logistical commitments to modernise the port. As part of a 10-year agreement signed in May 2024 between India Ports Global (IPGL) and the Ports and Maritime Organisation of Iran, India pledged $120 million in grant assistance for equipment and $250 million in rupee-equivalent credit for the port’s development.

India has already supplied port equipment worth $24 million, with further procurement underway. These investments aim to enhance port efficiency and operational capacity while ensuring sustainability.

Navigating Geopolitical Complexities

India’s investments in Chabahar have received a waiver from US sanctions due to the port’s role in delivering humanitarian aid to Afghanistan and facilitating trade with Central Asia. However, evolving geopolitical dynamics continue to pose challenges.

“The situation is fluid, but we are proceeding with planned investments. Orders for cranes and other equipment have been placed, and the local entity is addressing related concerns,” added an official.

Broader Regional Influence

Beyond Chabahar, India is strengthening its presence across the region with strategic investments in Myanmar and Sri Lanka.

• Myanmar: IPGL has taken control of Sittwe Port operations, a vital component of the Kaladan Multimodal Transit Transport Project. This initiative aims to establish seamless trade connectivity between Bangladesh, Thailand, and Kolkata, reinforcing India’s Act East Policy.
• Sri Lanka: India is expanding its influence through the development and operation of Kankesanthurai Port. The project is expected to boost bilateral trade and revive passenger connectivity via a proposed ferry service between Nagapattinam (India) and Kankesanthurai (Sri Lanka).

Future Outlook

The expansion of Chabahar Port aligns with India’s broader vision of creating an integrated trade network in the region. By modernising port infrastructure and enhancing connectivity, India seeks to establish itself as a trade and logistics powerhouse, contributing to regional economic development and global supply chain resilience.

The ₹4,000 crore investment marks a bold step toward leveraging Chabahar’s potential as a strategic trade hub, ensuring long-term growth and stability for India’s regional and global trade ambitions.

Source: Businessline