U.S. sanctions relaxation towards Iran's Chabahar port jeopardizes Indian investments
In a move that underscores India's commitment to the Chabahar Port project, the country has agreed to invest approximately $120 million, as announced on September 18, 2025. This investment comes despite the recent revocation of the sanctions exception for Iran, effective September 29, as confirmed by the US State Department.
The Chabahar Port, located near Iran's south-eastern border with Pakistan, is significant for India's investments. The port project, which was initiated in 2016, has seen India invest about $24 million in equipment for its development. In May 2020, India signed a 10-year agreement with Iran to operate and manage the port, which allows India to connect directly to Afghanistan and Central Asia, bypassing Pakistan.
The new agreement covers India's operations at the Shahid Beheshti terminal in Chabahar port. Despite the revocation of the sanctions exception, the ongoing procurement of remaining port equipment for Chabahar Port remains underway. According to government figures, the handling of cargo at the port has been increasing, with volumes reaching up to 80,000 twenty-foot equivalent unit (teu) and 3 million tonnes (mt) of bulk cargo, in FY25.
The authority that revoked the exemption from sanctions for Iran regarding Afghanistan reconstruction aid and economic development in 2018 was the United Nations Security Council through the "Snapback" mechanism. This mechanism can reinstate sanctions in case of violations of the Iran nuclear deal. However, the revocation does not appear to have affected the handling of cargo at the port, as it is not explicitly stated in the current information.
It is important to note that persons operating the Chabahar Port or engaging in activities described in the Iran Freedom and Counter-Proliferation Act may expose themselves to sanctions under IFCA. The new agreement for India's operations at the Chabahar Port has replaced the previous one, as disclosed in a Parliament question reply in November 2024.
The Chabahar Port project is a strategic move for India, providing a crucial link to Afghanistan and Central Asia, and strengthening India's economic ties with the region. Despite the challenges posed by the revocation of the sanctions exception, India continues to invest in the project, demonstrating its commitment to its successful development.
