Prime Minister of India Narendra Modi chaired a cabinet meeting that confirmed the provision and operationalisation of a $150m credit line for developing Iran’s Chabahar Port.

The development of the port is intended to grow India’s maritime trade in the region.

According to a memorandum of understanding (MoU) signed in May last year between Nitin Gadkari, India’s minister for shipping, road transport and highways and his Iranian counterpart, India will prepare and control two berths in Chabahar Port Phase-I, with investment of $85.2m and annual revenue expenditure of $22.95m on a 10-year lease.

Ownership of equipment will be transferred to Iran on completion of the 10-year period or for an extended period, based on mutual agreement, according to the MoU.

“Chabahar Port lies outside the Persian Gulf in Iran and will help in expanding maritime commerce in the region,” an official statement said after the cabinet meeting.

It noted that Iran and Afghanistan were two key regional trading partners, and this port in the Gulf of Oman would help to facilitate growing trade and investment.

The Indian cabinet has authorised the Shipping Ministry to form a company in Iran for implementing the Chabahar Port Development Project and related activities, according to the official statement, while ministers of finance, external affairs and shipping have also been authorised to finalise the agreement with Iran.