The United States has delivered a significant blow to the Chabahar Port project by revoking the sanctions waiver that was granted to India and other countries in 2018. This exemption, which allowed India to operate and develop the port without facing US penalties, will be terminated from September 29, 2025. The revocation brings India’s strategic initiative of using Chabahar as a key trade route to Afghanistan and Central Asia under the threat of American sanctions. The US government has described this step as part of its “maximum pressure” campaign against Iran, aimed at isolating the Iranian regime and disrupting illicit financial networks that support Tehran’s military activities.

Chabahar Port holds immense strategic importance for India, providing a direct connection to Afghanistan and the Central Asian region while bypassing Pakistan. India has invested nearly $120 million in developing the port infrastructure, managed through India Ports Global Limited (IPGL), which operates the Shahid Beheshti terminal under a long-term agreement. The port also serves a humanitarian role by facilitating the delivery of aid to Afghanistan, especially after the Taliban came to power. India’s use of Chabahar is seen as a counterbalance to China-backed Gwadar Port in Pakistan, thus playing a vital role in regional geopolitics and trade.

The termination of the exemption puts Indian companies working on the port at risk of facing American sanctions under the Iran Freedom and Counter-Proliferation Act (IFCA). This introduces significant legal and financial challenges, potentially disrupting port operations, investment plans, and future expansions. It also complicates India’s diplomatic position as it tries to maintain balanced relations with both the US and Iran amidst regional tensions. The revocation raises concerns about the continuity and expansion of India’s connectivity and trade projects in the region.

Strategically, Chabahar remains a crucial gateway linking India to resource-rich Central Asia and Russia through the International North-South Transport Corridor (INSTC). The port’s position near the Gulf of Oman and the Strait of Hormuz adds to its regional significance. With the US revoking the sanction exemption, India faces a difficult challenge in protecting its investments while navigating complex international diplomatic and economic realities. This decision comes as a major setback for India's strategic aspirations and emphasizes the growing intensity of US measures to contain Iran's influence.