- India re-evaluates Chabahar Port role amid US sanctions.
- Port crucial for India's trade access to Afghanistan.
- Chabahar integral to International North-South Transport Corridor.
India is mulling various options on its engagement in the development of the strategically-located Chabahar port in Iran against the backdrop of the Trump administration threatening a 25 per cent additional tariff on countries doing business with Tehran.
What is Chabahar Port and where is it located?
Chabahar Port, located about nearly 1,000 km from Gujarat’s Kandla port. India proposed developing the Chabahar Port in 2003 to provide an alternative route for Indian goods to reach landlocked Afghanistan and Central Asia via road and rail connectivity under the International North-South Transport Corridor, bypassing Pakistan.
The progress on the project had slowed earlier due to US sanctions on Iran linked to its suspected nuclear programme.
To operationalise India's role at the port, a long-term agreement was signed between Indian Ports Global Limited (IPGL) and the Port & Maritime Organisation of Iran. The agreement replaces the initial 2016 pact covering India's role at the Shahid Beheshti terminal in Chabahar Port, which had been extended annually.
What happened at Chabahar Port now?
India is a major partner in the development of the Chabahar port, located in the Sistan-Balochistan province Iran's southern coast. Earlier, on January 15, media reports claimed India is looking at withdrawing from the Chabahar Port project in view of fresh American tariffs on nations having trade relations with Iran.
It is learnt that India is in the process of transferring approximately USD 120 million -- the amount it committed for the project -- as part of a move to end its direct exposure to the Chabahar port project, news agency PTI quoted people familiar with the matter.
A possibility to create a new entity to carry forward the development of the Chabahar port is also being considered, they said. This option will end the Indian government's exposure to the project, but in a way it will ensure the continuation of New Delhi's support, the people explained.
What MEA said on Chabahar's exit
In September last year, the US imposed crippling economic sanctions on Iran but had granted India a six-month exemption from the punitive measures on the Chabahar port project. The waiver will come to an end on April 26.
External Affairs Ministry spokesperson Randhir Jaiswal on Friday said New India is engaged with the US on the issue. His remarks in answering a question came amid reports that New Delhi is looking at withdrawing from it in view of fresh American tariffs on nations having trade relations with Iran.
"As you are aware, on October 28, the US Department of Treasury had issued a letter outlining the guidance on the conditional sanctions waiver valid till April 26, 2026. We remain engaged with the US side in working out this arrangement," Jaiswal said.
US imposed fresh sanctions on countries doing business with Iran
As tensions between Washington and Tehran escalated again, President Donald Trump announced a fresh 25 per cent tariff on countries doing business with Iran. The new tariff is likely to have a "minimal impact" on India, government sources said on Tuesday.
Jaiswal said the volume of two-way trade between India and Iran was USD 1.6 billion last year. Out of the total, India's exports was to the tune of USD 1.2 billion and import was of USD 0.4 billion.
Why is Chahabhar Port crucial for India?
1. Chabahar Port offers India direct access to Afghanistan, Central Asia and Europe while bypassing Pakistan.
2. Strategically positioned outside the Strait of Hormuz, it remains largely insulated from West Asian conflict-related disruptions.
3. The port is a key part of the International North-South Transport Corridor, a multimodal network linking the Indian Ocean to Europe via Iran and Russia, cutting shipping time by nearly 15 days compared to the Suez route.
4. In 2024, India signed a 10-year agreement with Iran, committing $370 million through India Ports Global Ltd, highlighting its long-term strategic intent.
5. More than a commercial hub, Chabahar underpins India’s trade security, regional connectivity and humanitarian outreach to Afghanistan, making it central to New Delhi’s geopolitical and economic strategy as it targets a $10 trillion economy.
6. The Chabahar port is being developed by India and Iran to boost connectivity and trade ties. Both the countries are also strongly pitching for making Chabahar port an integral part of the International North-South Transport Corridor (INSTC).
7. The INSTC is a 7,200-km-long multi-mode transport project for moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.
(With inputs from agency)