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The Intergovernmental Agreement on the establishment of the North-South transport corridor was signed by Russia, India and Iran in September 2000 during the second Eurasian Transport Conference in St. Petersburg. Later, due to its attractiveness, the list of participants expanded - the project included Azerbaijan, Armenia, Belarus, Kazakhstan, Oman and Syria. Thus, the North-South corridor turned from a trilateral to a multi-format project.
The importance of the international transport corridor (ITC) increased every year, despite the fact that for several years it was used as a route for transporting goods exclusively between Russia and Iran. The reason was the identified technical difficulties, including the limitations of the Iranian port infrastructure, which didn't ensure the delivery of cargo volumes to India. Trying to increase it, it was found that Iran’s land transport network isn't ready for this either.
It wasn't possible to make the corridor completely overland due to a number of contradictions between New Delhi and Islamabad. In addition, the US imposed unilateral restrictive measures against Iran. However, the advantages of the corridor over other routes of cargo delivery between Russia and India were obvious.
For example, in comparison with the sea route through the Suez Canal, the distance is more than halved, and this significantly reduces the cost of transportation and its timing. Therefore, the Indian side continued to work on finding options for full participation in this project. As a result, after a lengthy negotiation process, an agreement was reached on the joint development of the port infrastructure in Chabahar, which is considered as one of the main links in the route and is the maritime part of the ITC.
Due to the rapid growth of the Indian economy, New Delhi was able to allocate about half a billion dollars to develop the infrastructure of the Chabahar port, which is used to deliver cargo to the port in Mumbai, as well as to develop railway lines in Iran for further communication with the northern part of the route.
However, the US-led sanctions policy interfered with the project and threatened India to fall under the unilateral American restrictions because of cooperation with Iran. However, with the assistance of Russia, this issue was resolved by the Indian authorities, and Washington made concessions to New Delhi, making an exception for it as part of developing infrastructure in Chabahar and building a road network to Afghanistan. As a result, India has ensured contacts with the Iranian and Afghan sides.
In December 2018, the Iranian port Shahid Beheshti, through which the main shipments were carried out, was transferred to the Indians under operational control. At the same time, further negotiations are underway on the development of the Iranian railway infrastructure on the area to Afghanistan, which requires rails, as well as rolling stock.
The international transport corridor "North - South" is beneficial for India not only as an optimization of cargo transportation with Russia, but also as the development of trade relations with the countries of Central Asia. There the interests of India extend to minerals, including precious stones and hydrocarbons. At the same time, this corridor will allow New Delhi to keep up with Beijing, which is actively joining an increasing number of countries in the region to its "One Belt, One Road" initiative, and to compete with it and offer an alternative to its partners.
The construction of the railway line within the North-South project offers great economic benefits in comparison with other alternative international transport routes. This project will create conditions for more efficient cargo transportation from the Persian Gulf to Europe from the perspective of cargo delivery terms, which is certainly beneficial financially.