US Revokes Sanctions Exemption for Iran's Chabahar Port, Impacting India's Regional Connectivity Plans

US Ends Chabahar Port Sanctions Waiver

The United States has announced the revocation of sanctions exemptions for Iran's Chabahar Port, a move set to take effect on September 29, 2025. This decision, communicated by the State Department on September 16, 2025, aligns with the 'maximum pressure' policy against the Iranian regime. The waiver, initially granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), had allowed certain activities at the port without exposure to U.S. penalties. Secretary of State Marco Rubio announced the revocation, with Principal Deputy Spokesperson Thomas Pigott stating it was 'consistent with President Trump's maximum pressure policy to isolate the Iranian regime.'

Strategic Implications for India

The revocation poses significant challenges for India, which has heavily invested in the Chabahar Port. India had secured a 10-year agreement to operate the Shahid Beheshti terminal at Chabahar, signed on May 13, 2024. Under this agreement, Indian Ports Global Limited (IPGL) committed approximately $120 million for operations and planned to raise an additional $250 million in credit for infrastructure development. With the exemption lifted, individuals and entities operating at the port or engaging in IFCA-described activities may now face U.S. sanctions, jeopardizing India's investments and operations.

Chabahar's Importance to Regional Connectivity

Chabahar Port holds immense strategic importance for India as it provides a crucial trade route to Afghanistan and Central Asia, effectively bypassing Pakistan. The port is also a vital component of the proposed International North-South Transport Corridor (INSTC), aiming to connect India with Russia and Europe. Furthermore, Chabahar serves as a strategic counterweight to China's Gwadar Port in Pakistan, located just 140 kilometers away. The port has been instrumental in facilitating humanitarian aid, including wheat shipments, to Afghanistan.

Reasons Cited by the US

The U.S. State Department justified the revocation by stating it aims to disrupt 'illicit financial networks that sustain the Iranian regime and its military activities.' The decision is part of a broader effort to isolate the Iranian regime, which the U.S. accuses of 'support to regional terrorist proxies and advance weapons systems that pose a direct threat to US forces and our allies.' The move follows a recent designation by the U.S. Treasury of an international illicit financial network supporting Iran's Islamic Revolutionary Guard Corps (IRGC).