Iran has announced funding the critical Chabahar-Zahedan railway project on its own rather than wait for India.

Iran's first Vice President Es'hagh Jahangiri said that the leader of the Islamic Revolution has agreed with withdrawing $300 million from the National Development Fund. Earlier, it was supposed to be a joint railway project between Iran's Islamic Republic Railways (RAI) and the state-owned Indian Railways Construction Ltd (IRCON), reported Indian media on Tuesday.

Speaking at the first session of Makran Development Council on July 7, Es'hagh Jahangiri said that the government attaches importance to the development of the southern coastal area of Makran on the Sea of Oman.

India also wanted the railway line to be built as part of a trilateral agreement between India, Iran and Afghanistan as an alternate trade route to Afghanistan and Central Asia.

But, the US sanctions have delayed disbursement of funds by India. This comes at a time when Iran and China are close to finalising a 25-year economic and security strategic partnership deal worth US $400 billion. The strategic partnership awaits the approval of the Majlis (parliament).

The fear of many is that when the strategic deal between Tehran and Beijing goes through then the latter could squeeze India out of this geo-strategically critical country.

The Chinese involvement in Iran would extend from banking, telecommunications, ports and railways to even the defence sector. It is said that there could be some crucial projects in Chabahar that the Chinese could land.

The 628-km railway line will cross the south-eastern province of Sistan and Balochistan to link the provincial capital of Zahedan with Chabahar, Iran's only oceanic port in the Gulf of Oman.

RAI plans to complete the railway's initial 150-km section by March 2021, the end of the current Iranian year, with the railway's full length planned for completion by March 2022.

The railway will also be connected to the Trans-Iranian Railway, allowing for direct rail freight services between Chabahar port and the rest of Iran, as well as landlocked central Asian countries such as Kazakhstan, Turkmenistan and Afghanistan.