- By Shivangi Sharma
- Sun, 01 Feb 2026 06:32 PM (IST)
- Source:JND
India has not allocated any funds for the Chabahar port project in its latest Union Budget, a move that comes amid tightening US sanctions on Iran and renewed pressure from Washington on countries maintaining trade ties with Tehran. The decision marks a departure from recent years, during which India made an annual outlay of Rs 100 crore towards the strategic connectivity project located in Iran’s Sistan-Balochistan province.
India remains a key partner in the development of the Chabahar port, which is seen as vital for enhancing regional connectivity and providing New Delhi access to Afghanistan and Central Asia while bypassing Pakistan. However, US sanctions on Iran continue to complicate India’s involvement, despite a temporary waiver granted to New Delhi that remains valid until April 26, 2026.
US Tariff Threats And Trade Concerns
While India has not officially withdrawn from the project, the pause in budgetary allocation coincides with heightened US scrutiny of India’s trade ties with sanctioned countries. US President Donald Trump has publicly stated that India faces steep tariffs partly due to its oil trade with Russia amid the Ukraine war, and has urged New Delhi to also reduce economic engagement with Iran. The Trump administration has reportedly warned of an additional 25 per cent tariff on countries doing business with Tehran.
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India Engages Washington On Chabahar
India has been reviewing its options on Chabahar in light of these developments. Last month, Ministry of External Affairs spokesperson Randhir Jaiswal confirmed that India was in discussions with the United States regarding the project. “We remain engaged with the US side in working out this arrangement,” he said, referring to the conditional sanctions waiver issued by the US Treasury.
There have also been media reports suggesting that India has already transferred its full committed amount of USD 120 million to Iran, with the final tranche paid in August 2025. New Delhi has not officially confirmed this. Reuters has reported that India is currently managing the project through local Iranian staff to avoid violating US sanctions.