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The MEA has taken note of the waiver’s revocation and is assessing its implications for India
The waiver, granted in 2018, allowed India to develop and operate the Chabahar Port. (Image Credit: Reuters)
The United States has revoked a key sanctions waiver that had since 2018 allowed India and other countries to operate Iran’s Chabahar Port without triggering American penalties. Effective 29 September 2025, any entity involved in operating, financing or servicing the port will be exposed to potential sanctions under US laws targeting Iranian-linked infrastructure.
While the revocation applies globally, India’s long-term stake in the project makes the announcement particularly significant. With a 10-year operational lease signed in 2024, over $120 million already invested, and humanitarian shipments regularly routed through Chabahar, the move raises fresh uncertainty for one of India’s most critical regional connectivity projects.
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What Has The US Announced And When Does It Take Effect?
The US has confirmed that it will revoke the sanctions waiver granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), which had allowed India to develop and operate the Chabahar Port without triggering secondary sanctions.
In a press statement, the US State Department said that the revocation will come into effect on 29 September 2025, after which “persons who operate the Chabahar Port or engage in other activities described in IFCA may expose themselves to sanctions.” This includes port authorities, logistics operators, bankers, insurers, and equipment suppliers.
The move follows a February 2025 National Security Presidential Memorandum ordering a review of all exemptions granted to Iran. US officials said the waiver, initially justified for Afghanistan’s reconstruction, no longer serves its intended purpose, especially after the Taliban’s takeover in 2021.
Why Was Chabahar Waiver Granted In The First Place?
The waiver, issued in 2018, was a calculated carve-out that allowed India to develop and operate the Chabahar Port without falling foul of US sanctions on Iran. At the time, the port was seen as essential for delivering aid and development assistance to Afghanistan’s then-elected government. The waiver covered port operations, the construction of an associated railway to Zahedan, and the shipment of non-sanctionable goods such as food, medicine and humanitarian aid.
The port became a critical logistics corridor. Hindustan Times reported that in 2023, India used Chabahar to send 20,000 tonnes of wheat to Afghanistan. In 2021, it facilitated the delivery of environmentally friendly pesticides to Iran. During the Covid-19 pandemic, it was also used to supply essential medicines and vaccines.
Why Is The US Revoking It Now?
Washington argues that the conditions which justified the waiver have fundamentally changed. With Afghanistan now under Taliban control, US officials say the humanitarian justification is no longer viable. The State Department stated that the waiver had been intended to support “Afghanistan reconstruction assistance and economic development”, conditions that no longer apply.
Furthermore, Washington believes the project could now offer Iran a commercial and financial lifeline, undermining the broader sanctions regime. Firstpost reported that American officials see the May 2024 long-term agreement between India and Iran, which includes a ten-year operational lease, a $250 million credit line, and expansion of port capacity, as a significant revenue-generating opportunity for Tehran.
The State Department has said it remains committed to “disrupting illicit funding streams financing Iran’s malign activities,” referring to the regime’s support for regional proxies and its military. US concerns are not only about the optics of India doing business with Iran, but also about the possibility that Chabahar, under Indian operational control, could allow Iran to reroute trade flows, attract foreign financing, or gain infrastructure upgrades, all of which could dilute the intended effect of US sanctions.
Why Does Chabahar Matter To India?
Chabahar, located in Iran’s Sistan-Baluchistan province along the Gulf of Oman, is the closest Iranian port to India. Often referred to as the “Golden Gate” to Central Asia, it gives India direct overland access to Afghanistan and beyond, bypassing Pakistan.
Strategically, it sits opposite Gwadar, the Chinese-developed port in Pakistan. This has made Chabahar not just a commercial venture, but a key geopolitical lever for India.
India Ports Global Limited (IPGL) took over operations at Chabahar in December 2018. Since then, the Indian Express reported that the port has handled more than 90,000 TEUs of container traffic and over 8.4 million tonnes of bulk and general cargo. It has repeatedly facilitated humanitarian supplies, including wheat, pulses and vaccines.
What Was The 10-Year Agreement Signed In 2024?
In May 2024, India and Iran signed a landmark ten-year agreement giving India long-term operational rights at the port. The deal included a $250 million credit window for infrastructure development and expansion. The contract aimed to boost cargo capacity to 500,000 TEUs and included a plan to construct a 700-kilometre railway line connecting Chabahar to Zahedan by mid-2026.
Firstpost noted that India had already pledged around $120 million for port equipment and logistics, including the delivery of six mobile harbour cranes worth $25 million.
What Has India Said About The Move?
India has acknowledged the decision. In a statement, the Ministry of External Affairs said: “We have seen the US press statement regarding revocation of sanctions waiver for Chabahar Port. We are presently examining its implications for India.”
India has long maintained that Chabahar is central to its regional outreach, enabling trade and humanitarian engagement with Afghanistan and Central Asia. The MEA had previously described the port as a strategic asset that serves both commercial and diplomatic goals.
What Risks Do Indian Firms Now Face?
The revocation means that Indian operators, shipping companies, insurers, bankers and suppliers associated with Chabahar could now be penalised under IFCA. Hindustan Times reported that key concerns include access to the dollar-based global financial system, obtaining shipping insurance, sourcing spare parts, and making or receiving payments through international banking channels.
The threat of sanctions not only impacts future expansion but also places existing investments at risk. Without clarity or exemptions, Indian private and public sector firms may hesitate to deepen their engagement with Chabahar.
Does This Affect India’s Regional Ambitions?
The revocation of the Chabahar waiver goes beyond immediate trade disruption. It challenges India’s long-term connectivity strategy, which has centred on establishing secure, overland routes linking the Indian Ocean with Central Asia, Afghanistan and Europe, routes that bypass both Pakistan and China’s infrastructure footprint in the region.
Chabahar also anchors India’s role in the International North–South Transport Corridor (INSTC), a multi-modal project involving Iran, Russia, and several Central Asian and European countries. The INSTC is aimed at connecting Mumbai to Moscow through Bandar Abbas, Chabahar, and the Caspian Sea, cutting transit time and cost for Indian goods. Instability or sanctions risk at Chabahar undercuts India’s credibility as a consistent stakeholder in that corridor.
Strategically, the port had also offered India a unique space to operate free from direct Chinese involvement, unlike Gwadar, which is a centrepiece of China’s Belt and Road Initiative. If India is forced to scale back its presence, it may open the door for China to exert more influence in southern Iran.
About the Author
Karishma Jain, Chief Sub Editor at News18.com, writes and edits opinion pieces on a variety of subjects, including Indian politics and policy, culture and the arts, technology and social change. Follow her @kar…Read More
Karishma Jain, Chief Sub Editor at News18.com, writes and edits opinion pieces on a variety of subjects, including Indian politics and policy, culture and the arts, technology and social change. Follow her @kar… Read More
September 19, 2025, 19:00 IST
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