How India will be affected by Trump’s withdrawal of sanctions waiver on Iran’s Chabahar Port

“I am very close to India, I am very close to the prime minister of India. We have a very good relationship,” said US President Donald Trump on Thursday. However, the tensions between the two countries — India and the United States — remain over the tariffs imposed by the American leader.

And now, there’s a chance that the tensions may further increase after Washington announced it will revoke the sanctions waiver for Iran’s Chabahar Port on September 29. According to a press note by the US Department of State, from September 29, anyone involved in operating, financing or servicing the port will face the same Treasury restrictions as other Iranian entities.

This move has serious implications for India — it poses a challenge to New Delhi’s access to Afghanistan and central Asia.

What’s the Chabahar Port and its connection to India?

The Chabahar Port sits at the mouth of the Gulf of Oman and is often referred to as the Golden Gate as it grants access to landlocked Afghanistan and other Central Asian countries through the sea. The port came into being in the 1970s and Tehran realised its importance amid the Iran-Iraq war of the 1980s.

India has long been interested in this port as it grants the country easy and faster access to the countries of Afghanistan and Central Asia bypassing hostile Pakistan. During Prime Minister Atal Bihari Vajpayee’s Iran visit in 2001 during which two agreements were signed, one on the Chabahar port.

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However, the project was affected as United States under President George W Bush declared Iran as one of the “axis of evil” along with Iraq and North Korea, pushing New Delhi to abandon its strategic relationship with Tehran.

In the subsequent years, India looked to the Iranian port again, seeking to deepen its commitment to Chabahar. In May 2024, during the Joe Biden administration’s tenure, New Delhi signed a long-term lease agreement granting state-run India Ports Global Ltd (IPGL) the right to equip and operate the port for 10 years.

At Tehran, Iran today, delighted to be part of the signing of the Long Term Bilateral Contract on Chabahar Port Operations in presence of HE Mehrdad Bazrpash, Minister of Roads & Urban Development, Iran. 

India will develop and operate Iran's strategic Chabahar Port for 10… pic.twitter.com/iXwekIk8ey

— Sarbananda Sonowal (@sarbanandsonwal) May 13, 2024

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The agreement was signed in Tehran by India’s shipping minister Sarbananda Sonowal and Iranian minister for roads and urban development Mehrdad Bazrpash, with both sides describing it as a milestone in bilateral cooperation. The deal also included a provision to extend the arrangement beyond the initial term.

Under the contract, IPGL pledged to invest about $120 million in port equipment and offered a $250 million credit line for “mutually identified projects aimed at improving Chabahar-related infrastructure”. And according to reports, India has already provided six mobile harbour cranes and other equipment worth $25 million.

And the port has reportedly handled tonnes and tonnes of cargo. It has also facilitated the supply of vaccines during the Covid-19 pandemic. An Indian Express report states that until now, a total of 2.5 million tonne of wheat and 2,000 tonne of pulses have been trans-shipped from India to Afghanistan through the Chabahar Port. In 2021, India supplied 40,000 litre of environment-friendly pesticide (Malathion) to Iran to fight locust menace through the port.

What has Trump done now?

In November 2018, the US administration granted a narrow exception under Section 1244 of the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA) to allow a limited number of activities that support the reconstruction and development of Afghanistan.

One such activity was the reconstruction and development of Afghanistan and allowed for the operation of Chabahar port in support of these goals.

However, on Thursday (September 18), the Trump administration that it was revoking this exception within 10 days. The decision, the US government said, amongst a number of other moves by the US to impose “maximum pressure on Iran”.

It’s important to note here that President Donald Trump had first announced he planned to end the waiver given to India earlier this February, as he signed an executive order mandating Secretary of State Marco Rubio to “rescind or modify” all such orders that provided any relief to Iran.

“Consistent with President Trump’s maximum pressure policy to isolate the Iranian regime, the Secretary of State has revoked the sanctions exception issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA) for Afghanistan reconstruction assistance and economic development, effective September 29, 2025,” the US State Department said in a statement.

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

But why the change now? That’s because Washington believes the circumstances have changed since the waiver was first granted. At the time, Afghanistan had an elected government. However, since 2021, the Taliban has taken charge of the country yet again. Moreover, US officials believe that the project gives Iran the money to fund its activities.

How does Trump’s actions affect India?

Trump’s revocation of the sanctions waiver on the Chabahar port puts India in a tough spot. The move exposes Indian operators at the port to US penalties. The sanctions will also cost India economically, as New Delhi has already invested millions into the project.

But the implications for India go beyond the economics of it. It serves India as a gateway to the landlocked area of Afghanistan and Central Asia. Additionally, the Chabahar is also part of the proposed International North-South Transport Corridor (INSTC), a multi-modal transportation route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran, and onward to northern Europe via St. Petersburg in Russia. As a result, not only will India’s trade with Central Asia be affected but it could also hamper India’s trade potential with European countries.

The Chabahar Port has also helps India counter China’s influence in the region through the Gwadar port in Pakistan. If India loses space in this region, it would enable Beijing to take control and assert its will there with no opposition.

It further tests India’s ties with the US as well as with Iran. New Delhi already shares a strained relationship with Washington currently over Trump’s 50 per cent tariffs, which includes a 25 per cent tax for importing Russia oil, on Indian goods. It also puts at risk India’s economic ties with Iran.

With inputs from agencies