Major blow to Indian stake in Chabahar as US cancels sanctions waiver for Iranian port

Billions of dollars have already been invested by India in the port and railway link.

Web Desk

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19 Sep 2025

The United States has revoked India’s exemption from sanctions on Iran’s Chabahar port, a move that threatens to disrupt New Delhi’s investments and projects in the region.

Chabahar, located in southeastern Iran, holds major geostrategic significance as a trade hub and has once again been pushed into uncertainty following Washington’s decision.

India signed an agreement with Iran in 2016 to develop the port, investing heavily in its infrastructure and related rail networks. The project has been vital for India as it provides a direct trade route to Afghanistan and Central Asia, bypassing Pakistan.

On September 16, the US State Department said that the move was "consistent with President Trump's maximum pressure policy to isolate the Iranian regime."

"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," it added.

The State further explained that the decision is part of Washington's stance against "illicit financial networks that sustain the Iranian regime and its military activities."

Billions of dollars have already been invested by India in the port and railway link, but the withdrawal of the sanctions waiver raises concerns about the project’s future. Analysts warn that without Chabahar, India may have little choice but to rely on Pakistani routes or turn to more costly alternatives to access Central Asia.

Experts further highlight that sanctions will complicate financial transactions and disrupt the supply chain for Indian firms involved in the project. Some believe New Delhi may seek to sustain the initiative by exploring trilateral partnerships with Russia or the European Union.

The US had previously allowed limited exemptions for Chabahar due to its importance for Afghanistan’s reconstruction and regional stability. However, officials now argue that the waiver is no longer viable given Iran’s policies, particularly its expanding ties with Russia and its role in Middle Eastern conflicts.

Iran has condemned the move, calling it “illegal,” and emphasised that Chabahar is a regional development project that should not be subjected to political pressure. Tehran has also expressed its intent to work with India and other partners to keep the project alive despite Washington’s decision.