In a departure from the past and an ominous sign for the project’s future, the Indian government has not allocated any funds for Iran’s Chabahar port amid US sanctions on the Islamic Republic.
US sanctions on Iran affect India’s Chabahar project despite a temporary waiver until April 2026. (Reuters file photo)Over the past few years, India has been spending annually ₹The Tk 100 crore project in Sistan-Baluchistan province on Iran’s southern coast, is a major partner in port development.
US sanctions on Iran affect India’s Chabahar project despite a temporary waiver until April 2026.
So far, India has not formally withdrawn from the Chabahar project, but the break in funding also comes amid tough US sanctions and massive tariffs on India. India already has half of the 50% tariff on its oil trade with Russia despite the Ukraine war, Donald Trump said. US President wants India to reduce trade with Iran.
India was mulling options related to the project after the Trump administration reportedly threatened 25% additional tariffs on countries doing business with Tehran, news agency PTI reported.
There have been reports that India has fully withdrawn and handed over its entire pledge of $120 million to Iran, with the final phase due in August 2025. India has not confirmed this, and is said to be running the project through local Iranian operatives to avoid violating US rules, Reuters reported.
The 2024 10-year contract to operate the port is a strategic, albeit limited, investment for India.
The long-term India-Iran agreement for the Shaheed Beheshti Terminal at Chabahar was signed on May 13, 2024. The agreement, signed in Tehran by India Ports Global Limited (IPGL) and the Ports and Maritime Organization (PMO) of Iran, replaces earlier, short-term agreements.
It was complicated because the US imposed crippling economic sanctions on Iran in September, though it granted India a six-month waiver that expires in April.
Last month, India’s Ministry of External Affairs spokesperson Randhir Jaiswal said that India is engaging with the US on matters related to the Chabahar port project.
Both India and Iran are strongly pitching Chabahar port as an integral part of the International North-South Transport Corridor (INSTC).
INSTC is a 7,200-km long multi-mode transport project to transport freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.
