India has recently signed a bilateral trade agreement with Iran for the development of railways and other infrastructure at strategically important Chabahar port at Iran.
As a part of this pact, Indian steel companies are likely to export rails consignment worth USD 150 million in Jul’16.
Amidst severe demand crunch in Indian steel market, such sizable exports can provide new opportunities to distressed Indian steel mills.
Chabahar is an Iranian free trade industrial zone established in 1992. It is of importance mainly from its geographical location as the shortest and the most secure route connecting CIS countries and Afghanistan to warm waters and its proximity to one of the largest oil, gas and mineral resources of the world and as the only ocean port of the country.
It is reported that main aim of the pact is to develop industries in Chabahar free trade zone which in turn would also lead to increase in steel demand from India.
Over INR 1 lakh crore investment is likely to happen in this trade zone and India aims to set up industries ranging from aluminum smelter to urea plants in Chabahr-free trade zone.
Apart from this bilateral trade agreement, a trilateral trade agreement on transport and transit corridor has also been signed between India, Iran and Afghanistan. Under this agreement, Indian railway PSU will build a rail line which will connect Chabahar port and Afghanistan.
The road and rail route built under this trilateral agreement will allow quick movement of goods first to Iran and then onwards to Afghanistan and CIS countries by bypassing Karachi, Pakistan.
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