What Happened
- India is likely to maintain its operational presence at the Chabahar port in Iran despite looming US sanctions pressure, given the port's critical strategic importance.
- India obtained a six-month conditional US sanctions waiver for Chabahar, effective from 29 October 2025, valid until 26 April 2026 — renewal will require the US Secretary of State to justify to Congress that it is "vital to US national security."
- India transferred its entire financial commitment of approximately USD 120 million to Iran before the US reimposed sanctions on Chabahar in late September 2025, effectively liquidating its liabilities.
- No allocation was made for the Chabahar port project in the Union Budget 2026, raising concerns about the project's future trajectory.
- The Chabahar port, located in Iran's Sistan-Baluchestan province, is strategically vital for India as it provides direct access to Afghanistan and Central Asia, bypassing Pakistan, and serves as a counterweight to the China-operated Gwadar port in Pakistan.
Static Topic Bridges
Chabahar Port — India's First Overseas Port Operation
Chabahar port is located on the southeastern coast of Iran in the Sistan-Baluchestan province, on the Gulf of Oman. It is Iran's only oceanic port with direct access to the Indian Ocean. India and Iran signed a bilateral agreement in 2003 to develop the port, but the landmark operational agreement came on 13 May 2024, when Indian Ports Global Limited (IPGL) and Iran's Port and Maritime Organisation (PMO) signed a 10-year contract to equip and operate the Shahid Beheshti terminal at Chabahar. This represents India's first port operation abroad.
- Location: Sistan-Baluchestan province, Iran — on the Gulf of Oman, approximately 72 km from the Pakistan border
- Initial bilateral agreement: 2003; 10-year operational contract signed: 13 May 2024
- Indian operator: Indian Ports Global Limited (IPGL), a joint venture of Jawaharlal Nehru Port Authority and Deendayal Port Authority
- India committed USD 120 million for terminal modernisation and offered a USD 250 million line of credit for infrastructure development
- Current handling capacity: approximately 2.5 million tonnes annually, with plans to expand to 12.5 million tonnes
- The port can handle vessels exceeding 100,000 tonnes displacement
Connection to this news: Despite budget non-allocation and the sanctions waiver approaching expiry in April 2026, India is signalling intent to maintain its presence at Chabahar because abandoning it would cede this strategic asset and undo years of diplomatic and financial investment.
International North-South Transport Corridor (INSTC)
The INSTC is a 7,200-km multi-modal transport network of ship, rail, and road routes connecting India to Russia and Northern Europe via Iran and the Caspian Sea region. The founding agreement was signed on 16 May 2002 by India, Iran, and Russia. The corridor is designed to be an alternative to the traditional Suez Canal route, estimated to be 30% cheaper and 40% shorter for freight movement between Mumbai and Moscow.
- Length: approximately 7,200 km
- Founding agreement: 16 May 2002 (India, Iran, Russia)
- Current members: 13 countries — India, Iran, Russia, Turkey, Azerbaijan, Kazakhstan, Armenia, Belarus, Tajikistan, Kyrgyzstan, Oman, Ukraine, Syria
- Route: Mumbai (sea) to Chabahar/Bandar Abbas (Iran) to Bandar Anzali (Caspian coast) to Astrakhan/Baku (sea/rail) to Moscow/St. Petersburg (rail)
- Chabahar port serves as the eastern anchor of the INSTC, providing the critical India-Iran sea link
- Alternative western route goes through Bandar Abbas and then overland to Baku via Azerbaijan
Connection to this news: Chabahar's viability is fundamental to the INSTC's effectiveness. If India's operations at Chabahar are disrupted by sanctions, the entire eastern arm of the INSTC — India's primary connectivity corridor to Central Asia and Russia bypassing Pakistan — would be compromised.
Chabahar vs. Gwadar — Strategic Port Competition
Gwadar port, located in Pakistan's Balochistan province approximately 72 km west of Chabahar, is operated by China under the China-Pakistan Economic Corridor (CPEC), a flagship project of China's Belt and Road Initiative (BRI). India has positioned Chabahar as a strategic counterweight to Gwadar. While Gwadar gives China access to the Arabian Sea and reduces its dependence on the Strait of Malacca for energy imports, Chabahar gives India access to Afghanistan and Central Asia without transiting through Pakistan.
- Gwadar: operated by China Overseas Ports Holding Company; part of CPEC (USD 62 billion investment framework)
- Gwadar is a deep-sea port; Chabahar also has deep-water capabilities (can handle 100,000+ tonne vessels)
- Distance between Gwadar and Chabahar: approximately 72 km
- Gwadar connects to Kashgar (Xinjiang, China) via the Karakoram Highway/CPEC route (~2,500 km)
- Chabahar connects to Zaranj-Delaram highway (built by India in Afghanistan) and onward to Central Asia
- India built the 218-km Zaranj-Delaram highway in Afghanistan (completed 2009) as a complementary connectivity project
Connection to this news: India's determination to maintain its Chabahar presence, even under sanctions pressure, is driven by the strategic imperative of not ceding this geostrategic corridor to China's expanding port network in the region, particularly given CPEC's Gwadar operations.
US Sanctions Framework — CAATSA and Iran Sanctions
The United States imposes sanctions on Iran under multiple legal frameworks, including the Iran Sanctions Act (1996, renewed and expanded), the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA, 2010), and executive orders. The Countering America's Adversaries Through Sanctions Act (CAATSA, 2017) further tightened the sanctions regime. Chabahar had received a specific waiver since 2018, recognising its importance for Afghanistan connectivity, but this waiver was revoked in September 2025 before being partially restored with conditions in October 2025.
- Iran Sanctions Act: originally enacted 1996 (as Iran and Libya Sanctions Act); renewed 2006, 2010, 2016
- CAATSA: signed into law 2 August 2017 — authorises sanctions on countries doing significant transactions with Russian or Iranian defence/intelligence sectors
- Chabahar-specific waiver: first granted in 2018, recognising port's role in Afghanistan access; revoked September 2025; six-month conditional waiver granted from 29 October 2025 to 26 April 2026
- Waiver renewal requires US Secretary of State to certify to Congress that the waiver is "vital to US national security"
- India's strategic dilemma: balancing Chabahar operations with the broader India-US strategic partnership and the February 2026 interim trade deal framework
Connection to this news: The looming expiry of the sanctions waiver in April 2026 creates a critical decision point. India must navigate between maintaining its strategic asset at Chabahar and preserving the momentum of the India-US trade deal, where commitments on Russian oil imports have already been made.
Key Facts & Data
- Chabahar port location: Sistan-Baluchestan province, Iran; Gulf of Oman coast
- India-Iran 10-year operational contract: signed 13 May 2024 (IPGL-PMO)
- India's investment commitment: USD 120 million (terminal) + USD 250 million (line of credit)
- Current port capacity: 2.5 million tonnes/year; planned expansion: 12.5 million tonnes/year
- US sanctions waiver: 29 October 2025 to 26 April 2026 (six months)
- INSTC: 7,200 km; 13 member countries; founding agreement 16 May 2002
- Gwadar-to-Chabahar distance: approximately 72 km
- Zaranj-Delaram highway (India-built, Afghanistan): 218 km, completed 2009
- India's first overseas port operation: Chabahar (Shahid Beheshti terminal)
- Union Budget 2026: zero allocation for Chabahar project