In a huge setback, Iran has decided to drop India out of the project to construct a rail line from Chabahar port to Zahedan, along the border with Afghanistan. Highlighting the delays on funding from the Indian side, the Iranian government has decided to go ahead with the project on its own. Notably, India and Iran had signed an agreement to construct a rail line four years ago.

As per a report in The Hindu, Iran has decided to proceed with the project on its own and is expected to complete the construction by March 2022. The country will be using $400 million from the Iranian National Development Fund. It is to be noted that the decision has come days after Iran signed a massive 25-year, $400 billion strategic partnership deal with China which will have a direct implication on India's presence in the West Asian country.

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Indian PM Narendra Modi with Iranian President Hassan RouhaniCredit: Reuters

Project was to provide an alternative route to Afghanistan

The project was taken forward by the Iranian Railways and the state-owned Indian Railway Construction Limited (IRCON). It was seen as India's commitment to a tripartite agreement between India, Iran, and Afghanistan to create an alternative route to landlocked Afghanistan and Central Asia. 

The MoU between IRCON and the Iranian Rail Ministry was signed in May 2016 when Prime Minister Narendra Modi visited Tehran to sign the Chabahar deal with Iranian President Rouhani and Afghanistan President Ghani. MoU was a part of the plan to construct the Chabahar-Zahedan railway as "part of transit and transportation corridor in a trilateral agreement between India, Iran and Afghanistan".

IROCN had pledged to offer all the services including superstructure work and financing for the project of around $ 1.6 billion.

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Chinese President Xi Jinping with Iranian President Hassan RouhaniCredit: Reuters

But even after multiple site visits conducted by IRCON engineers, India could not start work fearing economic sanctions from the US. However, the US has already provided a waiver for the Chabahar port and rail line to Zahedan but India is finding it difficult to find equipment suppliers and partners as they worry sanctions from the US.