In a joint statement, Modi and Iranian President Hassan Rouhani today said both the countries can improve their economic co-operation.
The countries also signed 11 other deals of mutual cooperation.
India has signed a contract with Iranian port company for developing two terminals and five multi-cargo berth in Phase-1 of the Chabahar port project. Indian investment in phase-1 will be about $500 million.
An MoU to develop the port was signed in May 2015 between Indian and Iranian ministers.
Chabahar is in southeast Iran and the port will help India to bypass Pakistan and open up a route to Afghanistan with which New Delhi has developed close security and economic interests, sources said.
The existing Iranian road network can link Chabahar port to Zaranj in Afghanistan, about 883 km from the port. The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland highway, setting up road access to four major cities of the country including Herat, Kandahar, Kabul and Mazar-e-Sharif.
According to Indian officials, the port will be used to ship crude oil and urea, saving India transportation costs. The country intends to lease two berths at Chabahar for 10 years.
Complementing the agreement is the signing of a trilateral strategic agreement on transport and transit corridor among India, Afghanistan and Iran.