India, Iran and Afghanistan have signed a historic trilateral contract for the establishment of a transport and transit corridor among the three countries. The deal was signed at the visit of Prime Minister Modi where he met Iran’s President Hassan Rouhani and Afghan President Ashraf Ghani.

The central point of the deal is the construction of the Chabahar port by India in two phases. Two firms – India’s India Ports Global Private Limited (IPGPL) and Iran’s Ports and Maritime Organization (PMO) have signed the agreement for the construction of the port. The IPGPL will develop two terminals and five multi-cargo berths in Phase-1 of the Chabahar project with an initial investment of $500 million by India.

As the West imposed ban on Iran has ended, there will be more expansion of Iran bound trade. India has increased its crude purchase from Iran ever since the end of the ban. With reducing remittance attraction and reciprocal commitment with Arab countries, Iran may get a higher role in India’s economic engagement. Hence, in future, there is higher scope and benefit for mutual trade between the two countries and the new port deal is very important as a trade facilitator.