When Indian Prime Minister Narendra Modi arrived in Tehran on May 22, he tweeted in Persian to his 20 million plus followers, “I have entered Iran, a country with which we have civilizational bonds. I am hopeful that we can strengthen the economic cooperation between our two countries.” During his Iran trip, Modi, Iranian President Hassan Rouhani and Afghan President Mohammad Ashraf Ghani signed agreements that not only would strengthen economic ties but also could reshape the economies of the region.

The most important agreement signed between the countries pertains to developing Iran’s Chabahar port in southeast Iran on the Gulf of Oman. While the idea of developing Chabahar into a regional trading hub began in the 1970s, the 1979 Islamic Revolution in Iran, the Iran-Iraq War and later international sanctions against Iran’s nuclear program stalled the program.

The development of the port paves the way for another important agreement: the trilateral transit agreement between Iran, Afghanistan and India. The transit agreement will open a route to the landlocked cities of Herat, Kandahar, Kabul and Mazar-e Sharif in Afghanistan, allowing India to bypass its rival, Pakistan. Rouhani said that the transit agreement could one day turn Chabahar into the “connection point of various countries, including India, Afghanistan, and countries in Central Asia, the Caucuses and Eastern Europe.”

“India looks to Iran as its gates to Afghanistan and Central Asia,” wrote Mohsen Jalalpour, chairman of the Iran Chamber of Commerce, Industry, Mine and Agriculture, in the Iran newspaper May 23. According to Jalalpour, India’s transportation costs to Afghanistan and Central Asia would be reduced by 30%. The Chabahar port also would be beneficial to India because it would put that country in a position to compete with China’s investments in Pakistan’s Gwadar port. Jalalpour wrote that in the short term, the transit agreement would decrease the costs of Iran’s exports to Central Asia, and in the long term the Chabahar port could compete with the ports in the Arab countries in the Persian Gulf.