US Revokes Sanctions Waiver On Iran's Chabahar Port, India's Port Plans Hit

(MENAFN- Live Mint) In another setback for India soon after the resumption of stalled trade talks and praise from US President Donald Trump for Prime Minister Narendra Modi, Washington has revoked the sanctions waiver granted for Iran's Chabahar Port . The waiver, which had allowed India and other countries to carry out development work at the port without the risk of US penalties, will cease to apply from 29 September.

Waiver revoked

The US announced it is rolling back the exemption originally granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), a key carve-out that gave India a window to pursue its long-standing plan to develop Chabahar as a gateway to Afghanistan and Central Asia.

Also Read | India in Iran port pivot to skirt Hormuz Strait chokepoint

In a statement issued by the office of the spokesperson of the US Department of State on 16 September, Washington said the revocation was consistent with President Trump's maximum pressure policy to isolate the Iranian regime, warning that those who continue operating at Chabahar or engage in related activities would risk exposure to sanctions.

“Once the revocation is effective, persons who operate the Chabahar Port or engage in other activities described in IFCA may expose themselves to sanctions under IFCA,” it said.

The timing complicates India's diplomatic balancing act. The stalled talks to finalise the first tranche of the bilateral trade agreement (BTA ) resumed on 16 September-the same day the sanctions waiver was revoked. Already, a record-high 50% duty on most labour-intensive goods has been in place since 27 August-putting India's $86.5 billion worth of exports to its biggest market at risk.

Strategic blow

The decision weakens India's plan to use the port for regional trade links, a project New Delhi first proposed in 2003. Located just 140km from Pakistan's Gwadar port, which is operated by China, Chabahar was seen by India as a crucial counterweight in the Arabian Sea.

It also serves as a key node in the International North-South Transport Corridor linking India with Russia and Europe. Over the past few years, the port has been used for sending wheat, medicines, and other essentials to Afghanistan, and the plan was to expand it for broader trade in textiles, engineering goods, pharmaceuticals, and food products.

Strategically, it was expected to open new markets for Indian exports in landlocked regions and integrate India more closely with the International North-South Transport Corridor for trade with Russia and Europe.

Also Read | India to fast-track Chabahar port works Investment in peril

For New Delhi, the move is particularly untimely. On 13 May last year, India signed its first long-term overseas port agreement-a 10-year deal to operate Chabahar in partnership with Iran's Port and Maritime Organisation.

Under the agreement, Indian Ports Global Limited (IPGL) committed about $120 million for operations and pledged to raise another $250 million in credit to support surrounding infrastructure. The revocation of the waiver now places this investment in jeopardy and leaves companies involved in the project vulnerable to US penalties.

“When sanctions were reimposed on Tehran in 2018 during President Trump's first term, the US had made a rare exception for Chabahar, acknowledging its importance for Afghanistan's reconstruction and regional stability. That rationale no longer applies,” said Dr Amit Singh, associate professor at the Special Centre for National Security Studies at JNU.

Also Read | India, US eye quick trade deal as negotiations resume amid tariff tensions

In the statement, the State Department said the latest step was part of Washington's broader effort to disrupt“illicit financial networks that sustain the Iranian regime and its military activities.”

MENAFN19092025007365015876ID1110083106