[5] It is a free port (free-trade zone) situated on the coast of the Gulf of Oman, and is Iran's southernmost city after Konarak.

In addition, in his book Aqd al-Ala lel-Moghefe al Ahla, Afdhal al-Din abu Hamid Kermani wrote in 584 A.H. (1188 C.E.)

[citation needed] Modern Chabahar dates back to around 1970 C.E., when it was declared a municipality and large port projects were started by order of Mohammad Reza Pahlavi.

A modern naval and air base was established as part of the Shah's policy of making Iran into a dominant power in the Indian Ocean.

Growing commercial sector located at free trade area with high potentiality to turn to a place that would connect business growth centers in south Asia (India) and Middle East (Dubai) to central Asian market.

The government plans to link the Chabahar free trade area to Iran's main rail network, which is connected to Central Asia.

Iranian contractors are developing both jetties to provide port facilities for handling of 6 million tons of goods a year; this is expected to be completed by 2011.

[12] India is helping develop the Chabahar Port, which will give it access to the oil and gas resources in Iran and the Central Asian states.

By doing so, India hopes to compete with the Chinese, who are building Gwadar Port on the other side of the border in Pakistan's Balochistan Province.

[13] On top of that, Chabahar shall be used for transshipment to Central Asia, while keeping the port of Bandar Abbas as a major hub mainly for trade with Russia and Europe.

India and Iran have entered into an agreement to provide preferential treatment and tariff reductions at Chabahar for Indian goods destined for Central Asia.

Interest in Chabahar port's project renewed once US-sponsored economic isolation of Iran was relieved, and benefits from the resurgent Indian economy.

India and Iran are discussing building a gas pipeline between the two countries along the bed of the Arabian Sea to bypass Pakistan, using the Chabahar port.