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International Relations April 25, 2026 4 min read Daily brief · #5 of 15

U.S. sanctions waiver on Chabahar port ends on April 26, could signal end of 23-year-old connectivity project

The US Treasury Department's sanctions waiver covering India's operations at Iran's Chabahar port expired on April 26, 2026, raising serious questions about ...

GS Paper 2 (International Relations) GS Paper 3 (Infrastructure Economics)

What Happened

  • The US Treasury Department's sanctions waiver covering India's operations at Iran's Chabahar port expired on April 26, 2026, raising serious questions about the future of a 23-year-old connectivity project.
  • India Ports Global Limited (IPGL), the Indian public-sector firm operating the Shahid Beheshti Terminal under a 10-year agreement signed in 2024, has invested nearly $120 million in the port.
  • Officials are exploring a temporary transfer of IPGL's stake in India Ports Global Chabahar Free Zone (IPGCFZ) to a local Iranian company, with a guarantee that the Iranian entity would restore the stake to India once sanctions are lifted.
  • India's Ministry of External Affairs confirmed active engagement with the US to explore whether port activities could continue under a conditional or renewed waiver.
  • No further financial commitments are being made by India until the sanctions situation is clarified.

Static Topic Bridges

India-Iran Relations and the Chabahar Port Agreement

Chabahar, located on Iran's southeastern Makran coast, is India's first overseas port project and a cornerstone of its connectivity strategy with Central Asia and Afghanistan. India and Iran signed the initial agreement for development of Chabahar's Shahid Beheshti Terminal in 2016. IPGL — fully owned by the Sagarmala Finance Corporation Limited (SMFCL), a government of India entity — took over operations and signed a formal 10-year agreement in 2024. The port is strategically positioned to offer India a non-Pakistani land route to Afghanistan and beyond.

  • Chabahar is located in Sistan-Baluchestan province on Iran's Gulf of Oman coast
  • It is the only deepwater port in Iran with direct access to the Indian Ocean, bypassing the Strait of Hormuz
  • India has invested approximately $120 million in the Shahid Beheshti Terminal

Connection to this news: The expiry of the US waiver puts India's entire investment and long-term strategic access at risk, forcing a temporary legal workaround through stake divestment to an Iranian entity.

International North-South Transport Corridor (INSTC)

The INSTC is a 7,200-km multi-modal freight corridor linking India to Russia and Europe via Iran. The agreement was signed on 16 May 2002 by India, Iran, and Russia, who remain the three founding member states. The corridor uses a combination of sea, rail, and road routes: goods travel by ship from Indian ports to Iran's Bandar Abbas or Chabahar, then overland or across the Caspian Sea into Russia and onward to Northern Europe. The route is estimated to be 30% cheaper and 40% shorter than the traditional Suez Canal route.

  • Members include India, Iran, Russia, Azerbaijan, Kazakhstan, Armenia, Belarus, Tajikistan, Kyrgyzstan, Oman, Syria, and Turkey
  • Chabahar is the critical Indian Ocean entry point for this corridor
  • The corridor provides an alternative to Pakistan-dependent land routes for India's Central Asia trade

Connection to this news: Loss of operational control at Chabahar would effectively stall India's INSTC ambitions, as the port is the gateway for Indian freight entering the corridor.

US Sanctions Regime on Iran

The United States has imposed comprehensive sanctions on Iran under multiple legislative instruments, including the Iran Sanctions Act and the Countering America's Adversaries Through Sanctions Act (CAATSA). These sanctions generally prohibit American persons and entities — and through secondary sanctions, third-country entities — from conducting significant transactions with Iran. However, the US Treasury's Office of Foreign Assets Control (OFAC) has the authority to issue specific waivers for humanitarian or strategic projects. Chabahar received such a waiver owing to its importance as a non-military, civilian trade and humanitarian transit corridor.

  • The US Treasury communicated to India in October 2025 that the Chabahar waiver would expire on April 26, 2026
  • Secondary sanctions risk discourages third-party banks and insurers from facilitating trade at sanctioned ports
  • The waiver was seen as an acknowledgment of India's strategic role in the region

Connection to this news: The waiver's expiry does not automatically trigger sanctions on India, but it removes the legal certainty that had allowed IPGL to operate without fear of secondary sanctions, creating a legal and financial limbo for the project.

Key Facts & Data

  • IPGL is a fully government-owned entity under the Sagarmala Finance Corporation Limited (SMFCL)
  • India's total investment in Chabahar: approximately $120 million
  • The 10-year operational agreement for Shahid Beheshti Terminal was signed in 2024
  • INSTC founding agreement signed May 16, 2002 by India, Iran, and Russia
  • INSTC total length: 7,200 km; estimated 30% cheaper and 40% shorter than the Suez Canal route
  • The US waiver covered activities at Chabahar port until April 26, 2026
  • Proposed workaround: temporary transfer of IPGCFZ stake to an Iranian entity with a buyback guarantee
On this page
  1. What Happened
  2. Static Topic Bridges
  3. India-Iran Relations and the Chabahar Port Agreement
  4. International North-South Transport Corridor (INSTC)
  5. US Sanctions Regime on Iran
  6. Key Facts & Data
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