The United States has revoked the sanctions waiver that was granted to India for the Chabahar Port project in Iran. This decision, which takes effect on September 29, 2025, is a part of the U.S. "maximum pressure" campaign against Iran. The waiver, initially issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), had allowed India and other nations to continue developing the port without facing U.S. penalties.

Impact on India

The revocation of the sanctions waiver puts India in a difficult position. India has been closely involved in the development of the Chabahar Port, viewing it as a crucial trade and transportation hub. The port is strategically important for India as it provides a trade route to Afghanistan and Central Asia, bypassing Pakistan.

Here's a breakdown of the potential consequences for India:

• Economic Challenges: Indian companies involved in operating at Chabahar may face exposure to U.S. penalties. This could affect cargo operations, investment plans, and future expansion of the port. India has already invested over $120 million in the project, with plans to increase cargo capacity and connect the port to Iran's railway network by 2026. These plans could be jeopardized.
• Strategic Setback: The Chabahar Port is a key component of India's regional connectivity strategy. It is a crucial link in the International North-South Transport Corridor (INSTC), which aims to connect India to markets in Central Asia and Europe. Without Chabahar, India's connectivity plans in the region could be severely hampered.
• Diplomatic Implications: The U.S. decision creates a diplomatic challenge for India, which must balance its growing strategic partnership with the United States against its longstanding trade and strategic ties with Iran.
• Alternative Trade Route: The port has been used to send humanitarian aid to Afghanistan, including wheat. The sanctions could disrupt this assistance.
• Countering China: Chabahar is seen as a counterweight to China's growing influence in the region, particularly its development of the Gwadar Port in Pakistan. The U.S. move could undermine India's ability to counter Chinese influence.

India's Response

India is currently reviewing the implications of the U.S. decision. The Ministry of External Affairs has not yet issued an official statement but is studying the impact of the decision.

Historical Context

India first proposed developing Chabahar in 2003 to create a trade route to Afghanistan and Central Asia, bypassing Pakistan. In May 2024, India signed a 10-year agreement with Iran to operate the Chabahar Port. Under the agreement, Indian Ports Global Limited (IPGL) committed $120 million and planned to raise another $250 million for infrastructure development.

The U.S. had previously provided a sanctions waiver for the Chabahar project, recognizing its importance for Afghanistan's reconstruction and economic development. However, the Trump administration has now reversed that decision as part of its "maximum pressure" policy on Iran.