Synopsis: The US has scrapped the sanctions waiver for Iran’s Chabahar Port, effective September 29, 2025, ending India’s exemption and threatening penalties for firms involved. The move jeopardises New Delhi’s $370 million investment, complicates its bid to turn Chabahar into a regional trade hub, and undermines India’s strategic connectivity projects in Central Asia and beyond.
In a major setback for India’s overseas infrastructure strategy, the United States has revoked the sanctions waiver previously granted for development of Iran’s Chabahar Port. The exemption, which had shielded India and other nations from US penalties, will expire on September 29, 2025, according to a statement from the US State Department issued on September 16.
Waiver Revoked Under “Maximum Pressure” Policy
The waiver was originally introduced in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), specifically to allow India to pursue Chabahar as a strategic gateway to Afghanistan and Central Asia without breaching US sanctions on Iran.
The US State Department said the revocation was consistent with its broader “maximum pressure” campaign to isolate Tehran.
“Once the revocation is effective, persons who operate the Chabahar Port or engage in other activities described in IFCA may expose themselves to sanctions,” the statement warned.
This announcement comes at a sensitive time—the very day India and the US resumed long-stalled bilateral trade agreement (BTA) talks. The negotiations are already strained by Washington’s record-high 50% tariffs on several Indian exports since August 27, endangering a trade flow worth $86.5 billion annually.
Strategic Blow for India’s Regional Connectivity
For India, the revocation strikes at the heart of a two-decade-old plan to position Chabahar as a counterweight to Pakistan’s Gwadar Port, which is being developed by China.
Situated just 140 km from Gwadar on the Arabian Sea, Chabahar was envisioned as a regional trade hub connecting India to Afghanistan, Central Asia, Russia, and Europe via the International North-South Transport Corridor (INSTC).
Over recent years, the port has been used to deliver wheat, medicines, and other essentials to Afghanistan, with long-term plans to expand trade in textiles, pharmaceuticals, engineering goods, and food products.
The waiver’s withdrawal now raises serious doubts about the viability of these ambitions, especially as India faces pressure to diversify exports amidst slowing global demand.
Investment in Jeopardy
The timing also places India’s first long-term overseas port agreement at risk. On May 13, 2024, India signed a 10-year deal to operate Chabahar in partnership with Iran’s Port and Maritime Organisation.
- Committed Investment: $120 million in port operations.
- Additional Credit Line: $250 million pledged for infrastructure development.
With the waiver revoked, both Indian Ports Global Limited (IPGL) and associated firms risk US sanctions, potentially stalling or derailing the project.
Broader Geopolitical Context
The revocation underscores Washington’s determination to tighten financial and trade restrictions on Iran while complicating India’s diplomatic balancing act between the US and Iran.
Analysts warn the move could push India closer to alternative routes, including investments in Russia’s Far East and enhanced connectivity through Central Asia via multilateral platforms like the Shanghai Cooperation Organisation (SCO).
At the same time, it leaves New Delhi vulnerable in its competition with China, whose Belt and Road Initiative (BRI) continues to expand influence across the same geography.
Summary:
The US has revoked India’s sanctions waiver for Iran’s Chabahar Port, effective September 29, 2025, exposing firms involved in the project to penalties. The decision threatens India’s $370 million investment, undermines its plans to turn Chabahar into a regional trade hub, and disrupts connectivity projects aimed at countering Pakistan’s Gwadar Port and China’s BRI. Coming just as Indo-US trade talks resume, the move complicates New Delhi’s diplomatic balancing act and casts uncertainty over its long-term regional strategy.
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