India examining implications of US decision to impose sanctions on Chabahar port project

New Delhi, Sep 19
India is examining the implications of the Trump administration’s decision to revoke the US sanctions waiver linked to the Chabahar port project in Iran, in which India is a partner.

"We have seen the US press statement regarding the revocation of the sanctions waiver for Chabahar Port. We are presently examining its implications for India," MEA spokesperson Randhir Jaiswal told journalists at a media briefing on Friday.

The United States has declared its intention to withdraw the sanctions exemption for activities at Iran's Chabahar Port, which was initially granted in 2018. According to a statement from the US Department of State, this action will subject parties involved in port operations to potential penalties under the Iran Freedom and Counter-Proliferation Act (IFCA). The move is part of the Trump administration’s move to crack down on Iran amidst the rising hostilities in the Middle East.

The US decision to revoke sanctions exemptions for the Chabahar Port, which India is developing as a strategic connectivity project, has come as a setback for New Delhi. The development of the Chabahar port in Iran was aimed at building a route that would bypass Pakistan to reach out to Afghanistan and Central Asia for trade and humanitarian aid. The port also serves as a crucial counter to China's influence being exercised in the region through the development of the Gwadar port in the Balochistan province of Pakistan.

Starting September 29, entities operating the Chabahar Port and engaging in other related activities will face sanctions under the US IFCA.

In 2018, America agreed to provide a sanctions waiver that allowed India to develop Chabahar, given the key role it could play in the economic development of Afghanistan. However, there has been a change in the geopolitical situation after the fall of the US-supported Afghan government in 2021 and the Taliban coming to power.

Earlier in May, India and Iran formalised a decade-long contract concerning Chabahar Port operations. Under this arrangement, India committed to providing $250 million in credit facilities to support infrastructure development at the strategic port located on the Gulf of Oman.

India and Iran were planning to link the Chabahar port to the broader Iranian railway network through a 700 km rail line to the city of Zahedan. The projects were expected to be completed by mid-2026.