How the US-Iran conflict has thrown India’s Chabahar plans into doubt
The US sanctions waiver that had allowed India to operate at Iran's Chabahar port lapsed in late April 2026, following the revocation of Iran-sanctions exemptions announced in September 2025.
A six-month waiver (roughly October 2025 to April 2026) had temporarily permitted uninterrupted Indian operations at the port, but this was not renewed amid the escalating US-Iran standoff.
To reduce exposure to US sanctions, India has withdrawn personnel from the port and prepaid its outstanding investment commitment of about $120 million toward the Shahid Beheshti Terminal.
India is reportedly weighing whether to transfer its operating stake in the terminal to an Iranian entity, though no final decision has been implemented.
The developments have renewed uncertainty over India's only Pakistan-bypassing land-sea route to Afghanistan and Central Asia.
Chabahar Port and India's connectivity strategy
Chabahar is a deep-water port on Iran's southeastern coast, on the Gulf of Oman, outside the Persian Gulf and near the Pakistan border (close to Iran's Sistan-Baluchestan province). India, Iran, and Afghanistan signed a trilateral agreement on Chabahar in May 2016 during a prime ministerial visit to Tehran, and in 2018 India Ports Global Limited took over operations of the Shahid Beheshti Terminal at the port under a long-term contract. For India, Chabahar has strategic value because it offers access to Afghanistan and Central Asia without transiting Pakistani territory, which does not permit India transit trade rights through its soil to Afghanistan.
Key Details
- Chabahar has two terminals: Shahid Kalantari (older) and Shahid Beheshti (developed with Indian investment).
- The 2018 US sanctions waiver for Chabahar recognised the port's role in supplying humanitarian goods to Afghanistan and was renewed periodically until it lapsed in 2026.
- India's committed investment in the Shahid Beheshti Terminal has been reported at around $120 million.
The end of the sanctions waiver directly threatens continued Indian operational control of the terminal, forcing New Delhi to balance its strategic connectivity project against exposure to US secondary sanctions.
International North-South Transport Corridor (INSTC)
The INSTC is a 7,200-km multi-modal transport network (ship, rail, and road) linking India to Russia, Central Asia, and Europe via Iran and the Caspian Sea, established through an agreement signed by India, Iran, and Russia in September 2000. Chabahar functions as the maritime gateway that feeds Indian cargo into this corridor, making the two projects strategically linked.
Key Details
- The INSTC route can cut freight transit time and cost between India and Russia/Europe compared to the traditional Suez Canal route.
- Member countries have expanded since 2000 to include Central Asian states, Azerbaijan, Turkey, and others.
- Continued Indian access to Chabahar is treated as a precondition for full utilisation of the INSTC's southern leg.
Disruption at Chabahar due to sanctions directly reduces India's ability to operationalise the INSTC as an alternative trade route to Europe and Central Asia.
US secondary sanctions on Iran
Secondary sanctions are restrictions the United States imposes on non-US entities (including foreign governments and companies) that continue to do business with a sanctioned country, distinct from primary sanctions that bar US persons directly. US sanctions on Iran stem primarily from Iran's nuclear programme and regional activities, reinstated after the US withdrawal from the JCPOA (Joint Comprehensive Plan of Action) in 2018.
Key Details
- Waivers or exemptions to secondary sanctions are typically time-bound and can be revoked unilaterally by the US administration.
- Countries and companies operating in sanctioned sectors risk being cut off from the US financial system (dollar-clearing, correspondent banking) if waivers lapse.
- India has historically sought Chabahar-specific carve-outs from US sanctions given the port's humanitarian and connectivity role for Afghanistan.
The 2026 lapse of the Chabahar waiver illustrates how a bilateral US-Iran/US-West Asia confrontation can have direct spillover effects on India's third-country infrastructure investments.
- The India-Iran-Afghanistan trilateral agreement on Chabahar was signed in May 2016; India Ports Global Limited began operating the Shahid Beheshti Terminal in 2018.
- The US sanctions waiver for Chabahar, first granted in 2018, lapsed effective around 26 April 2026 after a final six-month extension.
- India's investment commitment at the terminal has been reported at approximately $120 million.
- The INSTC agreement dates to September 2000, signed by India, Iran, and Russia.