In an effort to enhance trade with Afghanistan and Central Asia, India has stressed on the need for accelerating construction of Iran's Chabahar port. The port, which is a free trade and industrial zone on the Makran coast of Iran's Sistan and Baluchestan province, is likely to open up newer markets for Indian exporters, including SMEs, intending to invest in these countries.

Incidentally, India's products are supposed to receive preferential treatment and tariff reductions at Chabahar port as per an agreement that Tehran and Kabul signed with India. This development is likely to encourage numerous Indian SMEs which intend to export products/services to Afghanistan or Central Asian countries because the geographical proximity of these markets will reduce their transaction costs too.

The Chabahar port, which will be connected to Kandla in Gujurat, is also likely to help Indian SMEs trade freely with these countries in the wake of Pakistan’s refusal to allow transit rights to India.

Sreemita Bhattacharya