Expiration of U.S. Sanctions Waiver Clouds Future of India’s Chabahar Port Project in Iran

The U.S. sanctions waiver that had permitted India to participate in the development and operation of Iran's Chabahar Port since 2018 expired on April 26, removing a legal exemption that for years had shielded New Delhi's involvement from the broader American sanctions regime on Iran. The exemption, first granted in 2018 under the Iran Freedom and Counter-Proliferation Act for the express purpose of supporting Afghanistan's reconstruction and economic development, had carved out a narrow space for Indian operations even as Washington maintained "maximum pressure" on Tehran. Its lapse did not happen all at once. The Trump administration moved to revoke the original waiver in September 2025, effective September 29, but after discussions with New Delhi the U.S. Treasury issued fresh guidance in late October extending a conditional, time-bound waiver valid only until April 26, 2026 — a window widely read as intended to let India wind down rather than expand its presence. India's footprint at the port is anchored in a ten-year contract that India Ports Global Limited (IPGL) signed in May 2024 with Iran's Ports and Maritime Organisation to equip and operate the Shahid Beheshti terminal, backed by roughly $120 million in equipment investment and a $250 million line of credit. With the waiver now expired, Indian media have reported that IPGL is preparing to divest its stake in the India Ports Global Chabahar Free Zone to a local Iranian entity, with the understanding that control could revert to India should sanctions be lifted or a new waiver secured.
Observers note that while the port can still function, its growth trajectory will likely be muted. Planned expansions, greater throughput targets, or new investment commitments from Indian entities now face a more complicated environment. India had previously signaled ambitions to scale Chabahar's capacity several-fold over the coming decade, but the loss of legal protection makes the firms operating the terminal — and their parent companies, some of which run other international ports — vulnerable to secondary sanctions, a risk legal experts have flagged as a deterrent to any expansion. That could translate into slower progress on infrastructure upgrades, reduced commercial ambitions, and a protracted period of uncertainty while diplomatic clarifications are sought. The Indian government has told Parliament that it has no further financial obligations to the project and that it remains engaged with all sides to address the implications, but that posture also reflects how little room it has to deepen its commitment under the current sanctions architecture.
The situation underscores the broader challenge for countries seeking to pursue projects in Iran that have geopolitical significance but are affected by third-party sanctions regimes. For India, the Chabahar port has strategic value tied to trade and regional connectivity, but the expiration of the U.S. waiver has highlighted how external sanctions policies can limit the practical realization of those ambitions. Chabahar — Iran's only deep-water oceanic port, sitting on the Gulf of Oman roughly 170 kilometers from the Chinese-backed Gwadar port in Pakistan — is the eastern anchor of India's "Connect Central Asia" policy and a key node in the International North-South Transport Corridor, a multimodal network conceived to link Indian ports through Iran to Russia, Central Asia and Europe while bypassing Pakistan entirely. New Delhi has long viewed the project as both a commercial gateway to landlocked Afghanistan and Central Asian markets and a strategic counterweight to Beijing's investment in Gwadar under the China-Pakistan Economic Corridor; Washington, in turn, had historically tolerated Indian involvement precisely because it saw Chabahar as a useful check on Chinese influence in the region. That tolerance has now collided with the administration's hardline Iran policy, leaving India caught between competing strategic logics. How New Delhi navigates its ongoing talks with Washington and Tehran will shape the port's near-term outlook and determine whether operations can be sustained while retaining any prospect of scaled development in the future. The risk for India is not only a stalled port but a wider erosion of its Eurasian connectivity strategy, as Central Asian states and other partners weigh whether to hedge toward alternative routes if the Indian-linked corridor remains hostage to sanctions uncertainty.