The 2018 sanctions reprieve for Iran’s Chabahar Port was revoked by the Trump Administration, signaling a significant change in U.S. policy regarding India’s important regional connectivity initiative.
With effect from September 29, 2025, the revocation imposes sanctions under the Iran Freedom and Counter-Proliferation Act (IFCA) on all people, businesses, and organizations associated with the port’s development, operation, funding, or rail connectivity projects.
Given the strategic significance of giving Afghanistan an alternative to trade routes centered in Pakistan, the waiver, which was granted in 2018, had provided a crucial carve-out that permitted India to pursue investments in the port and its related infrastructure without triggering secondary U.S. sanctions.
The action has a direct impact on India’s long-standing cooperation with Iran on Chabahar, where Indian companies, such as Ports Global Limited, have taken the lead in equipment supply and cargo handling.
India was also able to finance and take part in the development of the Chabahar-Zahedan railway, which is essential for connecting Iranian ports to the heartland of Afghanistan, thanks to the waiver.
Indian businesses, shipping companies, banks, insurance companies, and logistical actors connected to the port are immediately at risk of losing access to the U.S. market or suffering punitive actions now that U.S. sanctions have been lifted. This will significantly lessen Chabahar’s usefulness as a regional commerce hub, make operations more difficult, and discourage carriers from docking.
In terms of strategy, India’s attempts to forge direct, safe trade ties with Afghanistan and Central Asia could be hampered by the revocation of the waiver.
As a strategic counterbalance to Pakistan’s Gwadar Port, where China has established its influence through the China–Pakistan Economic Corridor (CPEC), Chabahar was originally intended. Chabahar’s construction is expected to stall in the absence of sanction relief, hurting India’s plan to use the port as a strategic pivot for its “Connect Central Asia” agenda.
This occurs as India has already made large investments in port equipment, staff technical training, and some initial development projects along the Chabahar route.
Since Tehran had depended on India’s funding and experience to maintain port developments in the face of tightening international limitations, the sanctions retaliation puts additional economic hardship on Iran.
As aid and trade shipments encounter increased delays, uncertainties, and expenses, Afghan stakeholders who had profited from Indian grain and humanitarian shipments that were channeled through Chabahar would also be affected.
Concerns were raised by regional players who saw the waiver as a crucial safeguard against Afghanistan becoming overly dependent on Pakistan, as the decision effectively revokes previous U.S. understandings that Chabahar was necessary for Afghanistan’s stability and reconstruction.
Additionally, the revocation creates a geopolitical void that China is probably going to fill. Iran may court Chinese state-owned enterprises or increase its reliance on its current strategic relationships with Beijing as a result of deterring Indian businesses.
While strengthening a China-Iran-Pakistan commercial axis centered on Gwadar and CPEC, this dynamic runs the risk of undervaluing India’s influence in Iran and Central Asia. India’s outreach to landlocked Central Asian nations would be further restricted as a result, and New Delhi would be left without a comparable alternative path.
At a delicate time when both countries are closely collaborating on defense and technology, the U.S. decision is anticipated to exacerbate diplomatic relations between India and the United States.
New Delhi must decide whether to test U.S. resolve by upholding its Chabahar pledges through state-backed institutions or comply with penalties to protect its international financial exposure. In the upcoming months, India’s balancing act between Washington and Tehran is probably going to be defined by the response.
