Iran joins ‘SCO’, Russia-Indian corridor hyped for investments

Iran officially joined the Shanghai Cooperation Organisation (SCO) on 4 July, increasing the current SCO membership to nine. Alongside member states Russia and India, this new membership brings greater potential to the port of Chabahar, facilitating transit via Iran and the International North-South Transport Corridor (INSTC).

Last September, Iran signed a Memorandum of Obligations to become a permanent member of the SCO. In addition to Iran, the current SCO membership includes China, Russia, India, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Pakistan.

Founded in Shanghai in 2011 as a security group, the organisation has expanded its scope to cover regional development issues. Infrastructure and transportation, particularly the INSTC, are high on the agenda. Indian Prime Minister Narendra Modi confirmed this in a speech congratulating Iran’s arrival.

“With Iran’s membership in the SCO, we can work towards maximising the utilisation of the Chabahar Port. The International North-South Transport Corridor can serve as a secure and efficient route for landlocked countries in Central Asia to access the Indian Ocean. We should strive to realise its full potential”, said Modi.

Chabahar Port

Originally, the INSTC ran via the Iranian port of Bandar Abbas. This busy port in the south of Iran is already connected by rail, giving it an advantage over the more easterly situated port of Chabahar. However, Chabahar is much closer to India than Bandar Abbas. Moreover, US sanctions do not apply to this port.

The port highlights the potential of connecting Iran with the Indian market, which could be further expanded to Russia in the north and Southeast Asia on the opposite side. The main disadvantage is the lack of a railway connection. Currently, the port is awaiting investment to realise its potential.

India Ports Global Limited (IPGL), the company operating the Chabahar Port, has launched tenders for its development, with a budget of over 91 million euros. The Indian government has long been interested in investing in the port; however, in February of this year, they allocated only a little over 11 million euros for the Chabahar port. With Iran’s membership in the SCO, more private investments may find their way to this port and the INSTC.

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