China in Chabahar- Checkmate for India?

China in Chabahar- Checkmate for India?
The proposed 400 billion dollar deal between Iran and China is of critical concern for India’s strategic relations with Tehran and West Asia.

A ”prospective US$ 400 billion trade and military partnership” between China and Iran, which came to light last week, signposted a strategic geopolitical move which could have significant repercussions in the West and South Asian neighbourhood. The contours of the proposed deal continued to be the topic of debate until an 18-page 'draft copy' was obtained and made public by the New York Times. According to the document, Iran and China are working on a Comprehensive Strategic Partnership of immense economic and military significance.

The hard-hitting American sanctions imposed on Iran in 2018, when the U.S. abandoned the Joint Comprehensive Program of Action (JCPOA), crippled its economy, even while international isolation essentially ‘quarantined’ Iran. The deal with China now throws a much-needed 'economic lifeline’ to Iran.

The pact proposes deepening military cooperation and facilitates the infusion of billions of dollars of Chinese investment in energy and other areas of the Iranian economy, in return for Iranian oil. Listing nearly 100 projects, the deal also proposes three free trade zones — in Maku in northwest Iran; Abadan in the southeast close to Shatt al Arab; and on Qeshm Island — all of which challenge the traditional Gulf Cooperation Council (GCC) dominance of trade and manufacturing in the Gulf.

For India, caught in the crossfire between the U.S. and China over Iran, the deal is not only critical to its geostrategic relations with Tehran, but also with the extended neighbourhood of West Asia.


Cited as one of the major strategic geopolitical victories for the Modi government, the sealing of the Chabahar Port Deal increased India’s international engagement as well as secured valuable geo-economic incentives. Signed by Mr. Modi as part of the Afghanistan-India-Iran trilateral agreement, with Hassan Rouhani’s government, it guaranteed strategic use of Chabahar port itself, and, through it, access to Afghanistan and Central Asia, effectively bypassing Pakistan.

As part of this deal, sections of the port were developed and made functional through a joint Indo-Iranian effort. However, further development of the port and other infrastructural projects, such as the construction of the rail link from Chabahar to Zahedan, involved major delays because of the shadow of U.S. sanctions, and the inability to find suppliers in the sanction-ridden regime. Citing these and other project implementation delays, Iran recently announced that it has already begun construction work on the railway, without India.

China has, therefore, emerged as a disruptive force in the context of India–Iran strategic relations because of this proposed partnership. However, experts indicate that several other factors (like the Indo-U.S. relationship; India's response to the U.S. calls for sanctions against Iran; and Iran’s displeasure over the treatment of Indian Muslims) seem to have influenced Tehran's decision. They believe this is but a wider indication of the geopolitical current that is now flowing towards Chinese shores.

The strategic stake surrounding Chabahar and its implications for India are higher now when seen together with the existing Chinese control over the Gwadar port in Pakistan. Along with its likely presence in Chabahar and the exclusive use of the port at Jask and the island of Kish, it significantly extends China's maritime challenge in the Arabian Sea and the Indian Ocean region.

Further, Chinese tactical manoeuvres to secure naval bases and ports like Djibouti are of military as well as economic concern to India.

Critics are calling the latest development a failure of India’s foreign policy. In some quarters, it is seen as an appeasement of the U.S. at the cost of a traditional ally like Iran, which has always been a staunch supporter of India in Islamic fora. New Delhi will now be under pressure to achieve some kind of a strategic balance in nurturing its partnership with the U.S. at a time when it is facing a serious confrontation with China and Iran across several tactical dimensions.

The deal with China still has to pass through the Iranian Parliament and face several conservative lobbies. Conflicting arguments have emerged about the real weight of the collaboration — the time scale and distance between ‘signalling’ it and ‘operationalising’ it. Iranian government sources, quoted in the Indian Express, claim that “India can join in later in infrastructural development of the railway line”, while others cite that “If one does not react positively and timely to an offer, others may take it sooner or later”.

China entering Iran in defiance of the American imposed sanctions, and as per some unconfirmed reports also into Afghanistan once the U.S. exits, is indicative of the rise of Chinese smart power. What is more alarming is that these countries are critical to India's geostrategic interests. China engaging in steady economic investment in infrastructural projects and 'debt-trap diplomacy' across South Asia and Africa (Port of Hambantota in Sri Lanka, Nigeria in Africa etc.), showcases a new form of economic hard-sell and can be perceived against the larger backdrop of a neo-Cold War brewing in the region.


  • Weighed down by both the economic sanctions and the pandemic, Iran needs friends and allies now, and not the day after. China, under similar international scrutiny and pressure, has come forth with financial and political support. Iran has little option but to accept these overtures. This is also a signal to the international community ranged against it, to tone down the sanctions in exchange for economic benefits.
  • The deal will not fructify overnight, but will have to undergo a reasonably long gestation period. In the interim, Iran may hope for a change in presidency in the U.S. post-elections. A Biden presidency could relieve Iranian sanctions and revive the JCPOA, while a resurgent Trump might continue to push Iran into seeking other geostrategic partners.
  • Given Chinese aggression on the LAC recently, India has to now navigate in an increasingly hostile neighbourhood, where China is the regional heavyweight. It needs a robust foreign policy which counters Chinese aggressiveness in the region as well as secures relations with immediate and extended neighbours.

Author: Synergia Foundation Research Team