Web Desk: India has effectively withdrawn from Iran’s Chabahar port project after the United States reimposed sanctions on the facility, ending a decade-long strategic investment aimed at boosting New Delhi’s regional trade and connectivity ambitions.
The pullback follows Washington’s warning that countries doing business with Iran would face sweeping economic penalties, including steep tariffs on trade with the United States.
US President Donald Trump’s January 12 warning of a 25% tariff on any country trading with Iran has largely collapsed India’s involvement in developing and operating the Chabahar port.
To be sure, the United States reimposed sanctions on the port effective September 29, 2025, dealing a major blow to India’s strategic plans in Iran. Located on Iran’s southeastern coast, Chabahar served as a key gateway for India to access Afghanistan and Central Asia while bypassing rival Pakistan.
Following the renewal of sanctions, government-nominated directors on the board of India Ports Global Ltd resigned en masse, according to people familiar with the matter. The state-owned firm was responsible for developing and running the Shahid Beheshti terminal at Chabahar.
At the same time, officials took the company’s website offline to insulate individuals and entities associated with the port from potential U.S. sanctions exposure.
However, the U.S. Treasury’s Office of Foreign Assets Control granted India a six-month exemption from sanctions after New Delhi outlined plans to wind down all activities at Chabahar, including operations at the Shahid Beheshti terminal and related facilities.
The waiver took effect on October 29, 2025, and remains valid until April 26 this year, allowing India limited time to disengage from the project in an orderly manner.
More than a year before sanctions were reimposed, India transferred to Iran all the funds it had committed to the project, estimated at $120 million, a government source said.
The transfer occurred ahead of the signing of a long-term, 10-year agreement in March 2014 under which India was to operate the Shahid Beheshti terminal. At the time, officials were already aware that U.S. sanctions on Iran were likely to return.
“When sanctions are reimposed, transferring funds becomes difficult,” the source said. “So the government transferred all the funds to Iran before the sanctions took effect.”
According to the source, India now has no remaining financial liability under its commitment to the port, and Iran is free to use the funds independently to continue operations without any Indian involvement.
India’s exit from Chabahar marks a significant setback to its regional connectivity strategy, which sought to counter China’s growing influence and secure alternative trade routes in the region.
For now, the future of the port and India’s broader ambitions in Iran remains uncertain as geopolitical pressures continue to reshape regional alignments.
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