NEW DELHI, India — U.S.-India relations are once again at a crossroads. This time, it’s about New Delhi’s decade-long investment in Iran’s Chabahar port.
India’s most ambitious connectivity project in its vast neighborhood may now be at a standstill after a US sanctions waiver on the project expired on Sunday, with no sign of a revival from Washington. The port is central to India’s hopes of building a trade and transit corridor with landlocked Afghanistan and Central Asia.
Under its “maximum pressure” campaign, the United States has been pressuring Iran’s economy toward collapse through an aggressive sanctions regime aimed at cutting off sources of income.
The latest is a naval blockade of Iranian ports, with the Iranian government claiming control of the Strait of Hormuz. India relies heavily on the narrow sea route for its energy supplies and is negotiating with Iran to secure the route.
So, is the dream of India’s Chabahar over?
What’s in India’s Chabahar Port?
Located in the Gulf of Oman in southeastern Iran, Chabahar Port consists of two terminals: Shahid Qalantari and Shahid Beheshti. India is involved in Shaheed Beheshti and has invested at least $120 million in its equipment.
The port has been hailed as a cornerstone of India’s economic and strategic ambitions over the past two decades because of its geography.
Today, India’s arch-rival and nuclear-armed neighbor Pakistan stands between India and landlocked Afghanistan and Central Asia. Due to ongoing tensions with Pakistan, land routes to Afghanistan and Central Asian countries are not an option for India.
Thanks to Chabahar port, India will be able to circumvent this problem by transporting goods by sea, between Iranian ports and the west coast of Iran, and then by road and rail through Iran to Afghanistan and Central Asia. This is a method India has used repeatedly over the past decade.
There is a second strategic reason why this port is important to India.
In November 2016, Pakistan opened Gwadar, a deep-sea port at the mouth of the Gulf of Oman, with Chinese funding. Although it is a commercial port, China’s influence has long led India to fear that it could be used to challenge India economically or militarily through maritime naval operations.
Chabahar is located approximately 140 km (87 miles) west of Gwadar and is also a deep-water port in the Gulf of Oman. This would give India a strategic presence and reduce the risks posed by Gwadar by outflanking it.
Chabahar Port is also the southern node of the International North-South Transport Corridor (INSTC). INSTC is a 7,200 km (4,474 mile) network of railways, highways, and sea routes connecting Russia and India through Iran.
“Chabahar is important to India’s connectivity efforts in Central Asia, a region that is not easily accessible to New Delhi,” said Kabir Taneja, a researcher at Observer Research Foundation, an India-based think tank.
“Iran’s ports and the attached INSTC corridor provide both core investments in Iran and access to regions including Afghanistan that are looking to diversify their coastline and access to ports,” Taneja told Al Jazeera.
India and Iran first agreed to develop the port in 2003, but subsequent waves of U.S. sanctions against Iran halted progress. Talks resumed after the US government eased sanctions under the 2015 Iran nuclear deal.
In 2016, Indian Prime Minister Narendra Modi visited Tehran and, after meeting with then-President Hassan Rouhani, announced plans to build and operate the important Chabahar port and pledged to invest $500 million to develop the strategically important port.
It remained in minimal operation until US President Donald Trump withdrew from the nuclear deal in 2018 during his first term and reimposed sanctions on Iran. However, India quickly secured sanctions waivers from President Trump to continue developing Chabahar. Afghanistan was then ruled by a US-backed government and required Indian aid, which was shipped via Chabahar.
Bilateral relations between Afghanistan and Pakistan have hit rock bottom since the Taliban took power in Kabul in 2021, often erupting into fighting along the border.
Is Chabahar Port currently licensed?
The U.S. Treasury Department initially exempted Chabahar from sanctions in 2018, despite President Trump’s “maximum pressure” policy to undermine Iran’s revenue. This was during President Trump’s first term.
However, in September 2025, the second Trump administration announced that it would revoke all Iran-related sanctions waivers, including those for Chabahar. India lobbied to extend Chabahar’s exemption until April 26, 2026, after reportedly pledging to scale back operations in Chabahar.
India also paid the $120 million investment it promised in February, prompting criticism from opposition parties that accused the Modi government of bowing to U.S. pressure to abandon key strategic projects.
Pawan Khera, a spokesperson for India’s main opposition party, the Indian National Congress, said at the time: “Hearing that India unceremoniously withdrew from Chabahar at the first sign of pressure from the US marks a new low in the conduct of this government’s foreign policy.”
“How long will the Indian government allow Washington to dictate our national interests?”
After the exemption expired on Sunday, Indian Foreign Ministry Spokesman Randhir Jaiswal told reporters in the capital that New Delhi was in talks with Tehran and Washington on the issue.
“Obviously, the current conflict is also a complicating factor,” Jaiswal added, referring to the ongoing war.
What options does India have now?
Last year, the day before the US sanctions were imposed, and before the exemption was extended, a New Delhi-appointed official at India Ports Global Limited (IPGL), which manages the Chabahar port, resigned and the company’s website was taken down.
In February this year, the Indian government did not allocate any money for Chabahar in its annual budget, the first such failure in almost a decade.
Rajan Kumar, a professor of international studies at Jawaharlal Nehru University in New Delhi, told Al Jazeera that India has no choice but to wait for the fighting in the Middle East to end.
“India doesn’t have many options until the conflict ends and Iran remains under severe sanctions,” Kumar said.
According to reports, New Delhi is considering transferring an interest in the government-owned IPGL Chabahar Free Zone to an Iranian company for operation. However, no agreement has yet been reached. Analysts say such a move could allow India to return to a role in managing port operations whenever sanctions against Iran are lifted in the future.
“Chabahar has really become a losing bet over the last few years. In that sense, Chabahar is a really damaged asset,” said Michael Kugelman, senior fellow in residence for South Asia at the Atlantic Council.
“While there may be a scenario in which India chooses to take advantage of the opportunity later on, relations between the two countries will remain extremely fraught with the Iran war and the likely continuation of tensions with the United States,” he told Al Jazeera.
Therefore, Kugelman said India will face severe sanctions if it moves forward with the construction of Chabahar port. “Avoiding the risk of US sanctions will become increasingly difficult.”
Kugelman said that at best, India would fight a long game and consider returning to Chabahar port later. In the worst case scenario, he added, “New Delhi will conclude that it needs to accept its losses and withdraw.”
But Anwar Alam, a senior fellow at the Policy Perspectives Foundation think tank in New Delhi, said India’s ultimate decision on Chabahar would depend on its priorities.
He said India could manage sanctions and reach agreements with both the US and Iran without necessarily withdrawing from Chabahar.
“But if the Indian government’s priority is to keep President Trump and[Israeli Prime Minister Benjamin]Netanyahu in good spirits rather than maintaining control of Chabahar, then withdrawal is the only option,” Alam told Al Jazeera.
