By Praveen Swami
May 26, 2016
The muddy truck chugged into the city of Astrakhan, close to where the great Volga River empties into the Caspian Sea, on September 1, 2014, unnoticed by everyone but a handful of freight-handling agents from India. There was no particular reason anyone should have paid attention to the vehicle, carrying nothing but an empty container tagged with a GPS unit.
For those who had followed its journey, though, it was a historic moment: for the first time in a century, cargo from India had made its way across Asia by land, all the way to the threshold of Europe.
Few in India have fully grasped the radical ambition that underlies Prime Minister Narendra Modi’s decision to sign on to the $ 500 million project to transform the small Iranian port of Chabahar into a hub for Indian business.
The deal, signed in Tehran this week, will see India financing the construction of a $ 85 million port, building aluminium and urea plants, and underwriting the construction of a railway line to link it to Iran’s network. It is, for India, far more than a geostrategic gambit — it is, in fact, a revolt against history.
Last year, Modi spoke of creating a “vast network of physical and digital connectivity that extends from Eurasia’s northern corner to Asia’s southern shore”. It isn’t just imagination — but now that the ink has dried on the Chabahar agreement, the hard work has to begin, and India’s record on that front isn’t quite as good as on dreaming.
The idea of the Chabahar hub is a small cog in what is known as the International North-South Trade Corridor — a giant strategic project that rivals China’s better-known One Belt, One Road project, which runs East to West. The Federation of Freight Forwarders’ Associations in India, which carried out the 2014 dry run to Astrakhan from Mumbai via Chabahar, estimated that the corridor would slash freight costs to Russia by some 30%, and take just under half as long as the current sea journey through St Petersburg on the Gulf of Finland.
India’s ongoing negotiations with the Eurasian Economic Union, made up of Belarus, Kazakhstan, Kyrgyzstan and Russia, could help India expand trade and investment opportunities through the region. The Astrakhan study also got a truck from Chabahar to Baku, the capital of Azerbaijan, in 23 days, showing it could potentially rival the existing routes used by most Indian businesses to the region, involving moving cargo on China’s rail system, via Singapore or Hong Kong.
The land trade routes would also ease business with Central Asia’s energy-rich economies. India is the world’s fourth-largest energy consumer, and access to Turkmenistan and Kazakhstan’s gargantuan gas reserves would meet its future needs. India already has small export openings in the region, selling pharmaceuticals and information technology, but the land route will offer new opportunities for the construction industry and heavy manufacturing.
From the 1600s to the 1750s, Astrakhan — one of the few outposts open for foreign traders dealing with imperial Russia — had an established Indian community, made up of some 200 businessmen, labourers and hangers-on. The traders formed part of a constellation of Sindhi and Marwari traders whose interests spanned from Kandahar in Afghanistan to Tabriz and Isfahan in Iran and Bukhara in Uzbekistan — backed by sophisticated credit networks that were, in turn, underpinned by the backbone of caste and kinship.
The historian Stephen F Dale’s superb work, Indian Merchants and Eurasian Trade, 1600-1750, shows many of these people had assimilated into their Russian environment, often marrying local women — indeed, records show the existence of a Ramdas Dzhasuev from Multan and a Talaram Alimchandov from Sindh.
Inside of a century, however, these networks were to be levelled by two great developments — the destruction of Indian manufacturing by the industrial revolution, and the inability of the overland routes across Central Asia to compete with the steamship.
Put simply, the Chabahar project — the port, the rail network, and the road systems it would tap into — would give India dramatic access to economic opportunities in regions it has been cut off from for centuries. For years now, Indian governments have eyed the opportunities Chabahar offers — but have failed to capitalise on the potential.
Iran first realised the need for a deep water port distant from the fraught Persian Gulf during its war with Iraq, and hired Indian contractors to begin work on it in the 1990s.
Then, in 2003, Prime Minister Atal Bihari Vajpayee signed on to a deal with Iran to develop the port. This time, the considerations were part strategic. Pakistan obdurately resisted allowing Indian supplies to Afghanistan, to the point of disallowing food aid to transit through Karachi. India responded by building a road from Zaranj on the Afghanistan-Iran border to Delaram on the Khash river, giving itself access to Kabul from the southwest — but it still needed a port to send supplies. Chabahar fit the bill.
In 2004, an Indian consortium that included the Hinduja-backed Ashok Leyland Project Services, entered into an agreement with Tehran to develop Chabahar. However, even as the Delaram-Zaranj road was built, the port deal stalled — and ultimately sank, after sanctions were imposed on Iran amidst revelations on its nuclear programme.
Now, India finally seems back in the game — but history shows the country’s record on moving to realise plans drawn up on paper isn’t that great. The Kaladan multimodal transport project, which was supposed to link the North-eastern states to Myanmar’s Sittwe port, was supposed to have been operational by 2013 — but is in fact likely to take years more to be completed. Meanwhile, the cost has ballooned from the Rs 535 Crore estimated when it was announced in 2008 to Rs 2,904 Crore.
It will take sustained commitment from successive governments to turn the possibilities that have opened up for India into realities. Iran, and the world, aren’t going to be waiting for India to act on its dreams.