India holds firm on Chabahar port, engaging the US to extend sanctions waiver and protect a key strategic and connectivity project. Photo: X.
US President Donald Trump recently threatened to impose an additional 25 percent tariff on countries conducting business with Iran. The move triggered fresh uncertainty over India’s involvement in the strategically important Chabahar port in the country. The warning has come at a sensitive time, with New Delhi currently operating under a six-month conditional US sanctions waiver that is set to expire in late April. According to reports, Indian officials are engaged in intense negotiations with Washington to safeguard what New Delhi views as a critical strategic and connectivity asset.
Amid speculation that India could be forced to exit the project, the Ministry of External Affairs (MEA) clarified that New Delhi remains in touch with the United States to implement the short-term sanctions waiver and continue its work at the Iranian port.
Trump had imposed crippling economic sanctions on Iran in September last year, though India was granted a brief exemption for the Chabahar port project. That waiver allowed New Delhi to continue limited operations at the port, which is seen as vital for India’s regional connectivity ambitions.
The renewed tariff threat has, however, raised questions about whether the exemption would be extended beyond April and under what conditions.
According to multiple reports, India is exploring several options to retain its presence at Chabahar. An NDTV report said officials were examining a possible “middle ground” approach that could address US concerns while protecting India’s domestic and strategic interests.
Reports say that discussions were “complicated” but stressed that “exiting the port is not an option”. Another report by Hindustan Times quoted people familiar with the matter as saying the Indian government had already taken several steps to reduce the exposure of state-run entities and officials to potential US sanctions.
PTI reported that India is in the process of transferring around USD 120 million, the amount it had committed to the project, as part of efforts to end its direct exposure to the Chabahar port operations. Quoting sources, PTI reported that officials were also considering the creation of a new entity to carry forward the development of the port.
This arrangement, according to reports, would end the Indian government’s direct exposure to sanctions while ensuring the continuation of New Delhi’s support for the project in some form.
India first proposed developing the Chabahar port in 2003 as an alternative route to access landlocked Afghanistan and Central Asia. The project was designed to provide road and rail connectivity under the International North-South Transport Corridor, allowing Indian goods to bypass Pakistan.
Progress on the port had slowed in the past due to US sanctions on Iran linked to its suspected nuclear programme, complicating India’s plans despite the project’s strategic importance.
In recent years, Chabahar has been used for key consignments. In 2023, the port facilitated the shipment of 20,000 tonnes of wheat as humanitarian assistance to Afghanistan. Earlier, in 2021, it was also used to export environmentally friendly pesticides from India to Iran.
The MEA said the volume of two-way trade between India and Iran stood at USD 1.6 billion last year. Of this, India’s exports accounted for USD 1.2 billion, while imports from Iran were valued at USD 0.4 billion.
Zubair Amin is a Senior Journalist at NewsX with over seven years of experience in reporting and editorial work. He has written for leading national and international publications, including Foreign Policy Magazine, Al Jazeera, The Economic Times, The Indian Express, The Wire, Article 14, Mongabay, News9, among others. His primary focus is on international affairs, with a strong interest in US politics and policy. He also writes on West Asia, Indian polity, and constitutional issues. Zubair tweets at zubaiyr.amin
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