This $500Mn Investment Commitment by India in Iran’s Chabahar Port is of Global FDI Interest

By - CEM Team

Recent visit to Iran by Indian Prime Minister, Narendra Modi has resulted in a commitment of $500Mn Indian investment in Iran’s Chabahar trade free zone. Mr. Modi has marked this move as an “important milestone” for the relations between two countries.
 
We identify two important business benefits for global companies investing in India from this India – Iran struck deal:
 
The development of this port enables trade access to Afghanistan, Russia and Europe bypassing Pakistan and helps India gain a strong foothold in Iran, as said by Road Transport, Highways and Shipping Minister Nitin Gadkari
 
Connecting Iran, India, and Afghanistan to central Asia is viewed as another step to bolster India’s economic growth. “We want to link to the world, but connectivity among ourselves is also a priority. The corridor would spur unhindered flow of commerce throughout the region. Inflow of capital and technology could lead to new industrial infrastructure in Chabahar”, Modi said.
Hence, as a result of this deal, foreign businesses in India, can be benefitted to expand their export reach to three more corridors with more efficient channels now.
 
Further, this deal also helps aluminum smelter plant and urea manufacturing units to get access to cheap natural gas and power and has attracted interest of Indian firms to build their manufacturing units.
 
In a statement by Gadkari, he said Nalco will set up the aluminium smelter while private and co-operative fertiliser firms are keen to build urea plants provided they get gas at less than USD 2 per mmBtu."We spend Rs.45,000 crore annually on urea subsidy, and if we can manufacture it in the Chabahar free trade zone and move it through the port to Kandla and onward to hinterland, we can save that amount,"
 
Indo-Iranian ties has seen a number of agreements to enhance technological, petrochemical and banking cooperation too.

Source : PTI , The Guardian