The US government has said that it will take away a crucial sanctions exception for Iran’s Chabahar Port. This will have big effects for India’s strategic and economic interests in the area. The choice, which is part of US President Donald Trump’s “maximum pressure” campaign to cut off the Iranian regime, will take effect on September 29, 2025.
The Iran Freedom and Counter-Proliferation Act (IFCA) first allowed for sanctions exemptions in 2018 to help with rebuilding and economic growth in Afghanistan. However, the US State Department has since said that “people who run the Chabahar Port or do other things mentioned in IFCA may be subject to sanctions under IFCA” after the revocation goes into force.
This news directly affects India, which has been heavily committed in building a terminal at Chabahar port on the Gulf of Oman. India Ports Global Ltd (IPGL), which is run by the Indian government, signed a historic 10-year deal to oversee the port on May 13, 2024. This was the first time India has taken over the operation of an overseas port. The accord was important for New Delhi’s long-term plan to give Indian commodities a means to get to landlocked Afghanistan and Central Asia without going through Pakistan and its Gwadar port, which is backed by China.
The concept to build Chabahar, which India first suggested in 2003, is a major part of the International North-South Transport Corridor (INSTC). This network of ships, trains, and roads is meant to connect India with Central Asia, Russia, and Europe. Its main goal is to cut down on transit time and expenses by a large amount.
The port’s growth had been slowed by earlier US restrictions on Iran’s nuclear program, but the 2018 reprieve gave India a chance to speed things up. The long-term deal that was inked in 2024 took the place of the first one, which was signed in 2016 and renewed every year.
India has already seen how important Chabahar is to its strategy. In 2023, India sent 20,000 tons of wheat to Afghanistan through the port as humanitarian relief. It has also been utilized for other important shipments, such sending eco-friendly herbicides to Iran in 2021.
India is presently in a tough diplomatic and economic situation because the sanctions waiver has been taken away again. The decision might put at risk India’s more than $120 million in investments in the port’s infrastructure and the future of a significant connectivity project that is important to its regional goals. This puts New Delhi in a tough spot since it has to reconcile its long-standing economic and security relations with Iran with its strategic partnership with the United States.