The agreement will give India 10-year access to use the port, located close to Iran’s southeastern border with Pakistan, according to Iran’s ministry of roads and urban development.

The contract will, in turn, see India Ports Global Limited (IPGL) invest US$370 million into “providing strategic equipment” and “developing the transport infrastructure of the port”.

Iran’s urban development minister Mehrdad Bazrpash and India’s ports and shipping minister Sarbananda Sonowal signed the contract in the town of Chabahar, in a ceremony broadcast live on state media.

India in 2016 agreed to finance the development of the Iranian port as a trading hub for central Asia as Prime Minister Narendra Modi sought to revive economic ties with Tehran after the lifting of sanctions.

Modi and former Iranian president Hassan Rouhani oversaw the signing of a memorandum of understanding for the provision of a line of credit from India’s EXIM Bank to develop the port.

The development of the port however stalled, despite waivers to sanctions that the US began reimposing in 2018 after withdrawing from a landmark 2015 nuclear deal with Iran.

“Chabahar…can act as a focal point in the transit developement of the region,” Bazrpash said at the signing ceremony.

“We are pleased with this agreement, and we have full trust in India,” he added.

“Iran and India are seeking to develop Chabahar port as much as possible, taking into account the interests of the two countries for joint access to regional markets,” the Indian minister said.

This “long-term contract symbolises the enduring trust and effective partnership between India and Iran,” he added.

In 2019, before the outbreak of the Covid-19 pandemic, both countries agreed to speed up the project after a visit by India’s external affairs minster Subrahmanyam Jaishankar to Tehran.

Chabahar port is on the Indian Ocean about 100km west of the Pakistan border.