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The United States has said it is withdrawing the sanctions waiver granted to Iran’s Chabahar port, which is being developed by India, thereby ending the 2018 waiver provided during the first term (2017-2021) of President Donald Trump.
Chabahar, which sits at the mouth of the Gulf of Oman, is Iran’s first deepwater port that puts the country on the global oceanic trade route map. The port lies to the west of Iran’s border with Pakistan, about as far as Gwadar (a competing port developed by China in Pakistan) that lies to the east of the border.
Chabahar is of strategic importance to both Iran and India. It can potentially help Tehran ward off the effect of Western sanctions, and offers New Delhi an alternative route that bypasses Pakistan, which does not allow India land access for trade with Afghanistan and Central Asia.
The port is also part of the proposed International North-South Transport Corridor (INSTC), a multi-modal transportation project linking the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, and onward to northern Europe via St Petersburg in Russia.
Here is a look at why the Trump administration is withdrawing the sanctions, and what it means for India.
India’s involvement in the development of the port began in 2002, when Hassan Rouhani, then National Security Advisor to President Syed Mohammad Khatami, held discussions with his Indian counterpart, Brajesh Mishra.
On President Khatami’s visit to India the following year, he and Prime Minister Atal Bihari Vajpayee signed a roadmap of strategic cooperation, one of the key projects in which was Chabahar.
The emergence of a hostile Pakistan after Partition severed India’s land connections with Iran and Central Asia. This, however, did not greatly impact India’s closed economy in the four decades that followed Independence.
“It’s only after the 1990s, as the Indian economy opened up and India’s engagement with the world began to grow, that it began to look at trade routes as a central element of its larger geopolitical strategy,” C Raja Mohan, strategic affairs editor and contributing editor on international affairs for The Indian Express, said.
India and Iran began to cooperate more closely once the Taliban took over Afghanistan in 1996. Both countries were against the Pakistan-created Sunni Islamist militia, and backed the Northern Alliance led by Ahmed Shah Massoud. As India sought to get past the Pakistani block on land transit access to Afghanistan, the search for an alternative route became more urgent.
“The easiest routes for India to Central Asia and Russia are through Pakistan and Afghanistan. The next best is through Iran, which borders Central Asia and the Caspian Sea. Even as India sought access to Afghanistan, it was also looking at what was called the INSTC, which would take it to Russia and the European territories,” Raja Mohan said.
The Chabahar project became even more important for India after China began to develop the Gwadar port in Pakistan as part of the Belt and Road Initiative (BRI).
There are two distinct ports in the Chabahar project, Shahid Beheshti and Shahid Kalantari. India’s investment is restricted to the Shahid Beheshti port, according to the paper, ‘Geopolitics of Chabahar port for Iran, India and Afghanistan’, by Ali Omidi and Gauri Noolkar-Oak of the University of Isfahan (Iran).
India, Iran, and Afghanistan signed a trilateral agreement in April 2016, after which the Indian Shipping Ministry worked at a rapid pace towards developing the port. In December 2017, the first phase of Shahid Beheshti port was inaugurated, and India sent its first consignment of wheat to Afghanistan through Chabahar that same year.
Two years later, Afghan exports to India passed through the port for the first time. India received four such consignments that year.
Meanwhile, in January 2015, India Ports Global Limited (IPGL) was incorporated under the Companies Act, 2013, for the development of ports overseas. In December 2018, IPGL took over a part of the operations at Shahid Beheshti.
According to IPGL’s website, the Shahid Beheshti port is being developed in four phases. “On completion of all 4 phases, port capacity will (be) 82 million tons per year with 32 jetties: 16 multipurpose, 10 containers, 3 each oil and dry bulk,” it says.
In December 2019, the Iranian Minister for Roads and Urban Planning announced that the construction of a modern cruise terminal in the first phase had increased the capacity of the Shahid Beheshti port to 5.8 million tonnes, Omidi and Noolkar-Oak wrote in their paper.
India has traditionally had trouble implementing ambitious infrastructure projects in its neighbourhood. An editorial in The Indian Express in 2020 noted: “From Nepal to Myanmar, Sri Lanka and Iran, Delhi has made commitments on building power projects, highways, railways, and other infrastructure. Each proceeds slowly or not at all.”
More specifically, however, geopolitical roadblocks, the biggest of which is Iran’s relationship with the US, have been the major reason for the delay.
After the 2003 Vajpayee-Khatami agreement, follow-up action was slow as India drew closer to the administration of President George W Bush. The US had put Iran in the so-called “axis of evil” along with Saddam Hussein’s Iraq and Kim Jong-Il’s North Korea, which put pressure on New Delhi to go slow in its relationship with Tehran.
The US-Iran relationship started to improve temporarily after the Joint Comprehensive Plan of Action (JCPOA) was signed between Iran and the P5+1 and the European Union in 2015, when Barack Obama and Rouhani were Presidents.
The Trump administration, however, walked the US out of the Iran nuclear deal in 2018, and imposed sanctions on dealings with Tehran. A “carve-out” was provided to India for Chabahar, but it was difficult under the sanctions regime to find international suppliers for the material required to develop the port. Now, even this waiver has been withdrawn.
The US exit from Afghanistan and the return to power of the Taliban in August 2021 came as a further blow as India snapped ties with Kabul. The situation has improved since, in 2022, India reopened its embassy in Kabul and announced Rs 200 crore of development assistance to Afghanistan.
New Delhi also allocated Rs 100 crore for the Chabahar port project, and said in 2023 that it would send 20,000 metric tonnes of wheat to Afghanistan through the port.
In a statement, the US State Department’s principal deputy spokesperson Thomas Pigott said, “…consistent with President Trump’s maximum pressure policy to isolate the Iranian regime, the Secretary of State has revoked the sanctions exception issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA) for Afghanistan reconstruction assistance and economic development, effective September 29, 2025. Once the revocation is effective, persons who operate the Chabahar Port or engage in other activities described in IFCA may expose themselves to sanctions under IFCA.”
The move has come after the US attacked three Iranian nuclear facilities on June 22 in a bid to destroy the country’s nuclear facilities.
While it is targeted towards Iran, it will adversely impact India’s access to Afghanistan and Central Asia. Sources said that this is a major setback for India’s plans to develop the strategically located port, close to Gwadar in Pakistan.
