India plans to revive and fast-track a 700-km rail link to connect Iran's Chabahar port with Zahedan near its border with Afghanistan, as New Delhi aims to strengthen trade access to Central Asia and Eurasia amid signs the Gulf conflict is easing, two people familiar with the matter said.
The issue is expected to figure in discussions between Indian and Iranian officials, with New Delhi keen to leverage improving regional stability to accelerate connectivity projects that had slowed amid geopolitical uncertainties, one of the two people quoted above said on the condition of anonymity.
Under a recent peace agreement, the US has agreed to lift sanctions on Iran and to allow the export of crude oil and petroleum products. This has revived the prospects of Iranian crude returning to India on a consistent basis after a seven-year gap, with the rail link expected to facilitate oil exports at competitive rates. The move also aligns with India’s broader objective of diversifying trade routes and reducing dependence on traditional shipping corridors.
While no dates have been decided for formal ministerial talks, Iranian ministers have visited New Delhi in connection with multilateral meetings, and India is looking at engaging with officials in Iran to restart several stalled projects.
Missing link
Mint had earlier reported that India and Iran may soon revive plans to restore normal operations and expand the Chabahar Port at the facility as geopolitical conditions in the region begin to stabilize.
Queries emailed to the ministries of ports, railways, and external affairs, as well as to the Iranian embassy in New Delhi, remained unanswered.
The Chabahar-Zahedan rail corridor is a critical missing link in India’s strategy to develop the strategic Iranian port, located south-east of the Strait of Hormuz, as a gateway to the International North-South Transport Corridor (INSTC). The INSTC aims to provide the main trade channel for Central Asian and Eurasian countries located on the eastern side of the Caspian Sea and Afghanistan. The Zahedan line will connect Chabahar to Iran’s national rail network, providing a shorter and more cost-effective route for Indian exports and imports while bypassing both Pakistan and the China-Pakistan Economic Corridor (CPEC).
Once operational, the rail link is expected to improve cargo movement through Chabahar, enhance the commercial viability of the port, strengthen India’s strategic footprint in the region and expand access to emerging markets in Central Asia.
Geo-strategic interest
Initially estimated at around $1.5 billion, the rail link is expected to be funded primarily by Iran, with India providing partial funding and bringing its engineering expertise. India proposes to invest $400-500 million over the next few years to expand the port's capacity and support the development of the railway line, the second person said.
“The Chabahar-Zahedan rail line is significant for India’s geo-economic and geo-strategic interests. It would reinforce India’s ‘Connect Central Asia Policy’ by increasing trade, commerce, and strategic engagement with the region,” said Jajati K. Pattnaik, professor and chairperson, Centre for West Asian Studies, School of International Studies, Jawaharlal Nehru University.
Work on the Chabahar-Zahedan line had moved very slowly, even after Indian Railways’ Ircon and the Iranian Railways’ Construction and Development of Transportation Infrastructures Co. (CDTIC) inked a memorandum of understanding in 2016 for the project.
However, with port operations at Chabahar becoming viable, with a pickup in the movement of both container and dry bulk cargo and the port becoming a major trading channel for India before the war in West Asia disrupted operations, India wants to fast-track the project.
Afghan access
Union ports ministry data shows Chabahar handled 200,000 twenty-foot equivalent units (TEUs) in bulk cargo in FY25. In FY26, until the US-Israel attack on Iran that began end-February, it had handled close to its total capacity of 100,000 TEUs, which is to be expanded to 500,000 TEUs in future.
A TEU is a measure of volume in units of twenty-foot long containers. One 20-foot container equals one TEU.
“Unfortunately, even after India investing a $120 million in developing the Iranian port, US sanctions have caused a setback. Once fully operational, this sea and rail route will give landlocked Afghanistan unhindered access to the Indian Ocean, unlocking its vast mineral wealth,” said Shubhranshu, former chief of Indian Railways' rail wheel plant in Bihar's Bela and a sector expert.
“The connectivity project would make India a natural manufacturing hub for Europe. With India-EU trade deal in place, this logistics route will be an obvious add-on development. A lot of manufacturing from South-East Asia is likely to shift to India,” said V. Shanker, former executive director–planning, railways.
“Strategically, the rail link attempts to counterbalance China's influence in the region, specifically the Gwadar Port in Pakistan. It provides landlocked Central Asian nations with the shortest maritime route to the Indian Ocean, reducing reliance on existing corridors,” said Sudhanshu Mani, former general manager of Indian Railways and a key architect of the Vande Bharat Express.
India exported goods worth $253.63 million to Afghanistan in FY26, with total annual bilateral trade reaching $907.85 million. As of 2024, the trade between India and the Eurasian Economic Union (EAEU) stood at $69 billion, according to government data. Trade volume between India and the five Central Asian states (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) totalled close to $2.5 billion in 2025, three times that of India-Pakistan trade.