US sanctions on India’s Chabahar port in Iran take effect

US sanctions on India's Chabahar port in Iran take effect, New Delhi weighs options

US sanctions on India’s Chabahar port project in Iran officially took effect, ending the rare waiver Washington had granted since 2018 and putting New Delhi in a difficult position as it weighs its regional strategy against American penalties.

The move is part of President Donald Trump’s “maximum pressure” campaign against Tehran. State Department spokesman Tommy Pigott said the exemption was no longer justified, as it had been carved out to support Afghanistan’s reconstruction, a rationale that “disappeared” after the Taliban takeover.

“The revocation is consistent with President Trump’s maximum pressure policy to isolate the Iranian regime,” Pigott said.

The sanctions were announced a day after broad UN measures against Iran also snapped back into place, underscoring growing international pressure over Tehran’s nuclear programme.

From gateway to geopolitical dilemma

When first granted in 2018, Chabahar was seen as India’s gateway to Afghanistan, bypassing Pakistan and countering China’s development of Gwadar port nearby. But the Taliban’s return in 2021 has undercut that role. India had nevertheless signed a 10-year, $370 million agreement last year to expand Chabahar, underlining its strategic value.

Now, Indian entities, including state-run India Ports Global Limited (IPGL), have 45 days to exit or risk asset freezes and exclusion from the US financial system.

Joshua Kretman, a former US sanctions official now at Dentons, warned of broader risks: “If that sanctioned entity operates globally, needs access to major banks or dollar clearing, there is legitimate reason for concern.”

India’s balancing act

Indian foreign ministry spokesperson Randhir Jaiswal said New Delhi was still “examining the implications” of the US decision.

Analysts say India is likely to proceed cautiously. Aparna Pande of the Hudson Institute told India Today: “At a time when there is an American administration imposing sanctions and tariffs as punitive action, India will likely adopt a wait-and-watch approach.”

Others see room for strategic leverage. Geopolitical strategist Kadira Pethiyagoda told India Today that ties with Iran could aid India in “dealings with the US, Gulf states and Israel,” and might also align with broader efforts among non-Western powers to reduce reliance on Western-controlled financial systems.