Iran is intent on collecting tolls from ships passing through the Strait of Hormuz. In its ceasefire conditions, Iran has included the demand for control over Hormuz, stating it intends to charge a toll of at least one dollar per barrel from passing vessels.
Meanwhile, veteran Indian banker Ajay Bagga has stated that if Iran can collect tolls from Hormuz, then India should also collect tolls from ships passing through the sea in South Andaman. Ajay Bagga expressed dissatisfaction over allowing Iran to collect tolls at Hormuz, warning that this trend could start worldwide.
Ajay Bagga is a major player in the Indian financial sector, and his opinions are sought after in both market and geopolitical matters.
Ajay Bagga said that if Iran is given the freedom to impose tolls in Hormuz, it would set a dangerous precedent. Subsequently, Singapore could impose tolls in the Malacca Strait, and Turkey in the Bosphorus. He advised India that we should also deploy the Navy south of the Andaman and Nicobar Islands and start imposing tolls on all ships passing through the Indian Ocean.
He mentioned that previously, when the world operated on rules, charges were only levied on ships passing through man-made canals like Panama and Suez. Natural waterways remained completely free for transit, but that old rule is now being broken through Iran’s actions.
It is worth noting that the global rule dictates that no taxes shall be levied on ships passing through natural waterways. However, if a toll is imposed on Hormuz, it could serve as an example for other countries.
If Iran collects tolls from ships passing through Hormuz, it will result in an additional cost of 2.5 million dollars per shipment. This could lead to even higher oil prices.
The Andaman location where banker Ajay Bagga suggested imposing a toll is Indira Point, located on the Great Nicobar Island of the Andaman and Nicobar archipelago. This is India’s southernmost point. Located a short distance from here is Sabang in Indonesia. The sea lies between these two. This is a crucial waterway of the Indian Ocean. The distance from Indira Point to Indonesia’s northernmost island, Rondo Island (in the Sabang region), is only 145 km.
The distance from Sabang main port to Indira Point is about 150-170 km. This area is near the entrance of the Malacca Strait, where the maritime borders of India and Indonesia are nearly connected. Both countries are cooperating to keep this channel secure and to develop the Sabang port. This distance is extremely significant from the perspectives of maritime security, trade, and strategy.
