The United States imposed sanctions on India’s major port project in Iran on Monday, marking a significant setback for New Delhi’s regional ambitions and its decades-long strategic engagement with Tehran.
The move ends a rare exemption that had allowed Indian companies to continue developing the Chabahar port despite earlier US sanctions on Iran.
The sanctions follow a return of wide-ranging UN measures on Iran, as Washington, European allies, and Israel continue to pressure Tehran over its nuclear program.
State Department spokesman Tommy Pigott told AFP that the exemption was revoked “consistent with President Trump’s maximum pressure policy to isolate the Iranian regime” and that it had been made “for Afghanistan reconstruction assistance and economic development.”
A strategic gateway for India's trade
Chabahar has been central to India’s efforts to bypass Pakistan for access to Afghanistan and the wider Middle East. In 2018, the Trump administration had provided an exemption to allow Indian firms to invest in the port, citing Afghanistan reconstruction and regional economic development. But the ground has shifted dramatically since then.
Kabul is now under Taliban control after the US withdrawal in 2021, rendering India’s original plans to use Chabahar as a secure trade corridor into Afghanistan more complex. Despite this, India last year committed $370 million through state-run India Ports Global Limited (IPGL) to develop the port, which lies near the Pakistani border in Iran’s Baluchistan region.
“Chabahar has strategic value for India: regional connectivity with Iran and Afghanistan and the Middle East without being held back by friction with Pakistan,” said Aparna Pande, research fellow at the Hudson Institute.
Barely 200 kilometers away, China is building the Gwadar port on the Pakistani side, giving Beijing a major foothold in the Arabian Sea and Indian Ocean. Analysts warn that the US sanctions now place India in a delicate position, balancing investment ambitions with the risk of violating American regulations.
India weighs its next move
Under US law, IPGL and other Indian companies have 45 days to exit Chabahar or face frozen US-based assets and barred transactions. Joshua Kretman, counsel at law firm Dentons and former State Department sanctions official, warned that inclusion on the US list “has the potential to create a kind of cascading effect where banks and other companies may not transact with the designated business.”
“If that sanctioned entity operates globally, needs access to major banks or dollar clearing, there is legitimate reason for concern,” he added.
Indian foreign ministry spokesman Randhir Jaiswal offered a cautious statement: “We are presently examining the implications that this revocation has for India.” Analysts predict that New Delhi is likely to adopt a wait-and-watch approach.
“At a time when there is an American administration which is imposing sanctions and tariffs as punitive action, India will likely adopt a wait-and-watch approach,” Pande said.
Some experts suggest India could leverage its Iran ties as a tool in broader geopolitical negotiations.
Kadira Pethiyagoda, geopolitical strategist, said: “India may choose to wear the sanctions as part of a broader effort amongst non-Western Great Powers, including China and Russia, to reduce reliance on the US economy and decouple from Western-controlled financial networks.”
The sanctions come amid mounting tensions between Washington and New Delhi, including tariffs over India’s oil purchases from Russia.
(With inputs from AFP)
The move ends a rare exemption that had allowed Indian companies to continue developing the Chabahar port despite earlier US sanctions on Iran.
The sanctions follow a return of wide-ranging UN measures on Iran, as Washington, European allies, and Israel continue to pressure Tehran over its nuclear program.
State Department spokesman Tommy Pigott told AFP that the exemption was revoked “consistent with President Trump’s maximum pressure policy to isolate the Iranian regime” and that it had been made “for Afghanistan reconstruction assistance and economic development.”
A strategic gateway for India's trade
Chabahar has been central to India’s efforts to bypass Pakistan for access to Afghanistan and the wider Middle East. In 2018, the Trump administration had provided an exemption to allow Indian firms to invest in the port, citing Afghanistan reconstruction and regional economic development. But the ground has shifted dramatically since then.
Kabul is now under Taliban control after the US withdrawal in 2021, rendering India’s original plans to use Chabahar as a secure trade corridor into Afghanistan more complex. Despite this, India last year committed $370 million through state-run India Ports Global Limited (IPGL) to develop the port, which lies near the Pakistani border in Iran’s Baluchistan region.
“Chabahar has strategic value for India: regional connectivity with Iran and Afghanistan and the Middle East without being held back by friction with Pakistan,” said Aparna Pande, research fellow at the Hudson Institute.
Barely 200 kilometers away, China is building the Gwadar port on the Pakistani side, giving Beijing a major foothold in the Arabian Sea and Indian Ocean. Analysts warn that the US sanctions now place India in a delicate position, balancing investment ambitions with the risk of violating American regulations.
India weighs its next move
Under US law, IPGL and other Indian companies have 45 days to exit Chabahar or face frozen US-based assets and barred transactions. Joshua Kretman, counsel at law firm Dentons and former State Department sanctions official, warned that inclusion on the US list “has the potential to create a kind of cascading effect where banks and other companies may not transact with the designated business.”
“If that sanctioned entity operates globally, needs access to major banks or dollar clearing, there is legitimate reason for concern,” he added.
Indian foreign ministry spokesman Randhir Jaiswal offered a cautious statement: “We are presently examining the implications that this revocation has for India.” Analysts predict that New Delhi is likely to adopt a wait-and-watch approach.
“At a time when there is an American administration which is imposing sanctions and tariffs as punitive action, India will likely adopt a wait-and-watch approach,” Pande said.
Some experts suggest India could leverage its Iran ties as a tool in broader geopolitical negotiations.
Kadira Pethiyagoda, geopolitical strategist, said: “India may choose to wear the sanctions as part of a broader effort amongst non-Western Great Powers, including China and Russia, to reduce reliance on the US economy and decouple from Western-controlled financial networks.”
The sanctions come amid mounting tensions between Washington and New Delhi, including tariffs over India’s oil purchases from Russia.
(With inputs from AFP)
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