India’s involvement in the development of Iran’s Chabahar port has effectively come to a halt following the reimposition of sanctions by United States of America and renewed warnings from President Donald Trump over trade with Tehran.
Trump said on January 12 that any country doing business with Iran would face a 25 percent tariff on “any and all business being done with the United States of America.” The statement followed the US decision to reimpose sanctions on the Chabahar port from September 29, 2025, ending a limited exemption that had allowed India to operate at the facility.
Despite the sanctions, the US Office of Foreign Assets Control granted India a six-month waiver after New Delhi submitted details of how it planned to wind down all activities at the port, including operations at the Shahid Beheshti terminal.
The waiver took effect on October 29, 2025, and remains valid until April 26.
More than a year before the sanctions were reinstated, India transferred the full amount it had committed to the project, estimated at $120 million, to Iran. A government source said the funds were moved in advance because officials were aware that sanctions would return after the signing of the long-term agreement.
“When the sanctions are reimposed, transfer of funds would have become difficult. So, before the sanctions came, all the funds were transferred to Iran,” the source said. “India now has no liability in its commitment given to Iran on Chabahar port.”
“The Iranian government is free to do whatever they want with the money transferred by the Indian government per the long-term agreement,” the source said. “If Iran wants to buy cranes and other gears for Chabahar port, they can independently do that and they can carry on operations at the port independently without any involvement from India.
“India has no choice but to exit the Chabahar port,” a second government source said. “Fortunately, we don’t have any assets there; we were only running the port with manpower from Iran; that was the main activity of IPGL.” The source added, “We have to exit unless the sanctions are eased by the US again.”
Chabahar port is located in Iran’s Sistan-Baluchistan province on the country’s southeastern coast, outside the Persian Gulf.
The port was intended to give India access to Afghanistan and Central Asia through Iran and was also linked to the International North-South Transport Corridor, a 7,200-kilometre network connecting India with Iran, Russia, Central Asia and Europe through sea, rail and road routes.