US revokes Sanctions Waiver on Chabahar Port

US revokes Sanctions Waiver on Chabahar Port

Why in News? 

Recently, the United States revoked the special waiver granted in 2018 that had allowed India to use Iran’s Chabahar Port for development and reconstruction work in Afghanistan.

• The United States announced that the exemption will end within 10 days with effect from 29 September 2025.
• The port will now fall under sanctions provisions of the Iran Freedom and Counter-Proliferation Act as part of Washington’s continued maximum pressure approach against Tehran.

Chabahar Port in Iran 

• About: Chabahar Port is the oceanic port of Iran located on the Gulf of Oman. It has emerged as a gateway for trade between India, Iran, Afghanistan, and Central Asia. It provides an alternative to the congested route through Pakistan. The project allows India to bypass Pakistan for trade with Afghanistan and link further to Central Asian markets.

• Location: Chabahar is situated in the Sistan-Baluchestan province of southeastern Iran. It lies along the Makran coast, close to the Strait of Hormuz, which is one of the most critical maritime chokepoints in the world. The port is around 170 kilometers west of Gwadar Port in Pakistan.

• Features: 

• • Chabahar Port consists of two terminals, Shahid Kalantari and Shahid Beheshti. The Shahid Beheshti terminal has been the focus of recent expansion plans with India’s support. 
  • The port has facilities for container handling, bulk cargo, and multipurpose shipments. 
  • Chabahar also integrates with road and rail projects. The Zaranj-Delaram highway connects Afghanistan’s road network with the port. 
  • Chabahar is a counterbalance to Gwadar Port, which is part of the China-Pakistan Economic Corridor (CPEC). 
  • The Chabahar Port is a trade corridor that links South Asia with Central Asia through Iran. 
  • It connects the Indian Ocean directly with landlocked countries like Afghanistan and provides access further north to Turkmenistan, Uzbekistan, and Kazakhstan. 
  • The port is an entry point to the International North-South Transport Corridor (INSTC), which brings together several Eurasian countries to improve trade connectivity.

Timeline of India–Iran Chabahar Port Deal

• 2003: India began formal discussions with Iran in January 2003 to develop a port at Chabahar. The plan was to create an entry point on the Gulf of Oman to connect India to Afghanistan and Central Asia.

• 2012: In August 2012, the first trilateral meeting took place between India, Iran, and Afghanistan. The talks focused on transit, trade, and joint investment, with Chabahar identified as the central hub. 

• 2013: By January 2013, India committed $100 million to support the construction of Iran’s first deepwater port at Chabahar. This was seen as a step to improve access for Indian goods to Afghanistan.

• 2015: In May 2015, India and Iran signed a bilateral agreement. India pledged $500 million to modernize a berth at the Shahid Beheshti terminal and rebuild a 600-metre-long container handling facility.

• 2016: In May 2016, India, Iran, and Afghanistan signed the Chabahar Agreement, a trilateral pact to build an International Transport and Transit Corridor. India and Iran also signed a 10-year contract for equipping and operating part of the Shahid Beheshti terminal.

• • 2018: In May 2018, a short-term contract was signed to keep the project active due to delays in the earlier agreement. In December 2018, India formally took over operations, managing and office facilities.

• 2019: In February 2019, the port handled its first cargo shipment from Afghanistan, marking a successful demonstration of the trade route bypassing Pakistan.

• 2021: The return of the Taliban in Afghanistan created uncertainty. Talks between the three countries slowed down, but India continued to operate the terminal with Iran.

• 2024: In May 2024, India Ports Global Limited (IPGL) signed a long-term 10-year lease with Iran to operate the Shahid Beheshti terminal. India committed $120 million for equipment and a $250 million line of credit.

Strategic Importance of Chabahar Port for India

• Balancing China’s Influence: Chabahar Port allows India to counter China’s growing presence in the Indian Ocean. By developing Chabahar, India secures a foothold in the region and ensures its trade and security interests are protected from the China-Pakistan Economic Corridor. 

• Strengthening India’s Neighborhood Ties: The port supports India’s Extended Neighborhood Policy by linking India directly with Afghanistan and Central Asia. The International North-South Transport Corridor, established in 2000 and operational through Chabahar, provides faster access to landlocked countries. 

• Securing Alternative Trade Routes: Chabahar provides an alternative route for Indian goods to reach Afghanistan and beyond. Traditionally, Indian cargo had to pass through Pakistan, which caused delays and uncertainty. Through Chabahar, shipments reach Afghanistan in less than half the time compared to the Pakistan route.

• Boosting Economic Benefits: Chabahar enhances trade and investment opportunities for India. The port also enables India to import crude oil and export goods to Central Asia and Europe more efficiently. The port diversifies India’s trading routes and gains enhanced access to the markets of Russia, Eurasia and Europe. 

Impact of U.S. Revocation of Sanctions Waiver

• Financial Risks: The U.S. decision threatens India’s investment of around ₹200 crore in Chabahar Port. India had committed significant funds for equipment and infrastructure at the Shahid Beheshti terminal. These projects now face uncertainty as financial transactions may be hindered.

• Disruption to Trade: Chabahar is a crucial link in the INSTC, which has been operational since India, Iran, and Afghanistan signed the trilateral agreement in May 2016. Sanctions may disrupt India’s access to landlocked countries.

• Pressure on IR: India’s relations with Iran and the United States may face pressure. Iran sees Chabahar as a key part of its development strategy, while the U.S. is a major trade partner of India. Navigating these tensions will require careful diplomacy to protect India’s long-term regional interests.

• Hurdles in Port Operations: Sanctions could discourage shippers, insurers, and suppliers from using the port. This could slow port operations and reduce cargo throughput, affecting trade schedules. This could slow port operations and reduce cargo throughput, affecting trade schedules.