US revokes sanctions waiver for Chabahar port beginning Sept 29; Why India should be worried

The United States will revoke sanctions waiver for Iran’s Chabahar port from September 29, exposing operators to punitive measures and raising concerns in India, which is developing a terminal at the strategic gateway to Afghanistan and Central Asia.

The US State Department said the move was in line with President Donald Trump’s “maximum pressure” campaign against Tehran.

The waiver, first issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), had allowed India to continue work at Chabahar.

“Once the revocation is effective, persons who operate the Chabahar Port or engage in other activities described in IFCA may expose themselves to sanctions,” the department said in a statement.

The decision threatens to complicate India’s efforts to expand trade links with Afghanistan and Eurasia through Chabahar, located in Iran’s Sistan-Balochistan province on the Gulf of Oman.

New Delhi signed a 10-year contract in May 2024 to operate the Shahid Beheshti terminal, its first management of an overseas port.

Strategic setback for India

India has long viewed Chabahar as a vital gateway to bypass Pakistan and access landlocked Central Asia through the International North-South Transport Corridor (INSTC), a 7,200-km trade route stretching to Russia and Europe.

The long-term bilateral contract on Chabahar Port Operation was signed between Indian Ports Global Limited (IPGL) of India and the Port & Maritime Organisation (PMO) of Iran, enabling the operation of Shahid-Beheshti in the Chabahar Port Development Project for a period of 10 years. It replaces an initial 2016 pact, which covered India's operations at Shahid Beheshti terminal in Chabahar port and had been renewed on an annual basis.

The Ministry of External Affairs (MEA) had allocated ₹100 crore for Chabahar Port for 2024-25.

Chabahar is not only the closest Iranian port to India, but it is also an excellent port from a nautical point of view.

India weighs options

New Delhi first proposed developing Chabahar in 2003 and signed a memorandum of understanding in 2015.

The Trump administration’s 2018 waiver had allowed India to continue work, citing Afghanistan’s need for connectivity and non-sanctionable goods. With that exemption gone, companies and financiers may be reluctant to engage in the project.

It could also inadvertently strengthen Beijing’s Belt and Road Initiative (BRI) and the China–Pakistan Economic Corridor (CPEC).

India is examining the US decision to revoke the sanctions waiver, reported The Economic Times.