- India’s $120 million port investment is at risk.
- Waiver first granted in 2018 under IFCA.
- Chabahar key to India’s access to Afghanistan and Central Asia.
The United States has made the decision to revoke the special permission that allowed India and a few other countries to operate at Iran’s strategic Chabahar Port. This change will take effect on September 29, 2025, and it could have significant implications for India’s $120 million investment in the project, reports Marine Insight.
Background of the Exemption
This special waiver was initially granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), enabling India to develop Chabahar without the threat of U.S. sanctions. However, Washington has now issued a warning that anyone involved with the port or related activities may face penalties.
Washington’s Maximum Pressure Campaign
On September 18, 2025, Secretary of State Marco Rubio announced this decision, positioning it as part of the U.S. strategy of maximum pressure against Iran. Recently, the U.S. has also imposed sanctions on several Iranian entities linked to the oil trade.
Chabahar’s Strategic Importance for India
Chabahar holds significant importance for India as it offers a route to Afghanistan and Central Asia without having to go through Pakistan. Additionally, the port serves as a crucial link to the International North-South Transport Corridor (INSTC), which connects India to Russia and Europe. India first proposed the development of Chabahar back in 2003 and has since utilised it to send wheat and other supplies to Afghanistan.
India’s Investments and Agreements
On May 13, 2024, India signed a 10-year agreement with Iran’s Port and Maritime Organisation to manage the Shahid Beheshti terminal. Indian Ports Global Limited (IPGL) has committed $120 million and is looking to secure an additional $250 million in credit for infrastructure development. Since 2016, the government has already spent around ₹200 crore out of a total allocation of ₹400 crore. In the 2023–24 period, vessel traffic increased by 43%, while container traffic saw a rise of 34%.
US Waiver Removal and Strategic Calculations
The U.S. had previously kept Chabahar out of sanctions, highlighting its importance in supporting Afghanistan. Now that the waiver is lifted, India is at a crossroads: should it continue its work at Chabahar and risk facing sanctions, or should it pull back on its cooperation with Iran, potentially undermining its regional connectivity goals? The port holds significant strategic importance, sitting just 140 km away from Pakistan’s Gwadar port, which is operated by China.
Trump Administration’s Role
Earlier this year, President Trump announced plans to end the exemption and signed an executive order instructing Secretary Rubio to revoke all special permissions. The U.S. claims this move aims to disrupt the financial networks that support Iran’s government and military.
India-Iran Engagement Continues
Despite the pressure from the U.S., India has been strengthening its relationship with Iran. National Security Adviser Ajit Doval recently spoke with Iranian SNSC Secretary Ali Larijani about enhancing economic, security, and defence cooperation. They both agreed to meet in Delhi soon to push the port project forward.
Broader Impact of U.S. Sanctions on India
This is the fourth round of U.S. sanctions that directly impact India. Previous measures forced India to stop importing oil from Iran and Venezuela. India continues to resist U.S. demands to reduce oil purchases from Russia, showcasing its delicate balancing act between maintaining strategic autonomy and navigating global pressures.
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Source: Marine Insight
