US sanctions on Chabahar Port deal a major setback to India’s regional trade strategy. Here’s how it impacts India, Iran, and global geopolitics-

US,Sep.19,2025:According to US State Department deputy spokesperson Thomas Pigott, the exemption granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA) will end on September 29, 2025-

This exemption had allowed India to operate and invest in the Chabahar project without facing US secondary sanctions. The waiver was originally justified as being essential for Afghanistan’s reconstruction and trade, at a time when US forces were still present in the region.

Now, anyone involved in the operation, financing, or development of Chabahar Port will fall under American sanctions, creating serious legal and financial risks for India.

Why Chabahar Port Matters to India

The US sanctions on Chabahar Port are significant because the port is not just a trade hub but a pillar of India’s connectivity diplomacy.

• Chabahar lies on Iran’s southeastern coast in Sistan-Baluchestan province, providing India a gateway to Afghanistan and Central Asia without going through Pakistan.
• It is India’s first overseas port management project. In May 2024, India signed a 10-year contract to operate the Shahid Beheshti terminal.
• The project is linked to the International North–South Transport Corridor (INSTC), a 7,200-km multimodal network aimed at boosting trade between India, Iran, Russia, Central Asia, and Europe.

Timeline of India’s Engagement with Chabahar

• 2003: India first proposed to develop Chabahar Port to bypass Pakistan.
• 2016: PM Narendra Modi visited Iran, signing the landmark Chabahar agreement.
• 2018: US sanctions on Iran were tightened, but Chabahar was exempted.
• 2019: First shipments from Afghanistan reached India via Chabahar, bypassing Pakistan.
• 2023: India shipped 20,000 tonnes of wheat to Afghanistan through Chabahar.
• May 2024: India signed a 10-year operating contract, the first of its kind for India overseas.
• September 2025: The US officially revoked Chabahar’s waiver, placing India in a difficult position.

The Strategic Blow to India

The US sanctions on Chabahar Port directly undermine India’s multi-billion-dollar investment. Experts say it will:

• Delay India’s connectivity projects with Central Asia.
• Limit India’s ability to counter China’s Belt and Road Initiative (BRI), particularly at Pakistan’s Gwadar Port, located just 100 km from Chabahar.
• Weaken India’s geopolitical bargaining power with Iran and Afghanistan.

For New Delhi, this is not just an economic issue but a strategic loss.

China, Pakistan, and Gwadar

Chabahar has always been viewed as a strategic answer to Pakistan’s Gwadar Port, developed by China under the China-Pakistan Economic Corridor (CPEC).

Now, with sanctions looming, experts warn that China could step in to fill the vacuum left by India. Beijing is already Iran’s largest energy buyer and a key investor in infrastructure. If India is forced to scale down, Chabahar could tilt towards China, undermining India’s leverage.

Experts’ Views on the Sanctions

Prominent voices have sharply criticised Washington’s decision-

• Brahma Chellaney, strategic affairs expert, called the move a “punitive step against India”. He argued that China gains the most from such policies, while India pays the price.
• Michael Kugelman, South Asia expert at Wilson Center, said the revocation is “a strategic setback for India’s connectivity ambitions”.
• Zorawar Daulet Singh, geopolitical analyst, remarked: “This is an extraordinary situation where a so-called strategic partner is undermining India’s core interests while claiming to balance China.”

Impact on International North–South Transport Corridor (INSTC)

Impact on International North–South Transport Corridor (INSTC)

The INSTC project was designed to shorten cargo transport between India and Europe by thousands of kilometers. Chabahar was envisioned as the gateway port for this corridor.

With sanctions now clouding its future:

• INSTC’s viability is in question.
• Russia and Iran may seek to deepen ties with China, leaving India marginalized.
• India’s investments in road and rail links from Chabahar to Afghanistan risk stalling.

How US Strategy is Changing in the Region

Analysts note that the decision reflects Washington’s renewed “maximum pressure” policy against Iran, pushed by President Donald Trump in his second term.

While the US justifies the sanctions as a way to isolate Tehran, critics argue this undermines allies like India and pushes Iran closer to China and Russia.

For New Delhi, this presents a strategic dilemma—maintain ties with Washington or protect its hard-earned foothold in Iran.

India’s Options Going Forward

Faced with the US sanctions on Chabahar Port, India has limited but important choices:

1. Diplomatic Negotiation – Seek a fresh waiver by lobbying Washington, highlighting Afghanistan and Central Asia’s dependence on Chabahar.
2. Strengthen Ties with Iran – Double down on bilateral cooperation with Tehran to avoid losing influence to China.
3. Diversify Connectivity – Accelerate work on the India-Middle East-Europe Corridor (IMEC), announced at the G20 Summit.
4. Leverage Multilateral Platforms – Use BRICS, SCO, and UN forums to push back against unilateral sanctions.

The US sanctions on Chabahar Port are more than just an economic hurdle—they represent a significant strategic setback for India. For two decades, New Delhi has invested political capital and financial resources into making Chabahar a symbol of regional connectivity and independence from Pakistan’s chokehold.

Now, with Washington’s latest decision, India faces a narrowing path. Will New Delhi confront the US, or adapt its strategy by leaning more on Iran, Russia, and even China?

One thing is clear: the story of Chabahar is no longer about a port—it is about the future of India’s strategic autonomy in an increasingly polarized world.