Trump grants India reprieve from sanctions for 6 months to continue operations in Iran's Chabahar Port

New Delhi: President Donald Trump’s administration in Washington, D.C., has decided to continue for six more months a 2018 waiver, which allowed India to continue its role in the operations of the Chabahar Port in Iran despite sanctions on the Persian Gulf nation.

The Ministry of External Affairs in New Delhi confirmed on Thursday that the US had extended the waiver for six months, effective from October 29.

The Chabahar Port has strategic importance for New Delhi as it gives India a sea-land access to Afghanistan and Central Asia through Iran, bypassing its arch-rival Pakistan.

In keeping with Trump’s policy to exert “maximum pressure” on Iran, his Secretary of State, Marco Rubio, had last month revoked the sanctions exception issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA) for assistance for reconstruction and economic development of Afghanistan, with effect from September 29. The revocation had exposed persons and entities involved with the operation of the Chabahar Port or in other activities to sanctions under IFCA.

The US State Department, however, later agreed to extend the waiver even as the relations between New Delhi and Washington, D.C., came under stress over Trump’s tariff tirade against India, his public claim about making India stop buying oil from Russia, his growing bonhomie with the civil and military leadership of Pakistan and his boasts about mediating the May 10 ceasefire between the two South Asian neighbours.

Trump had granted New Delhi the waiver during his first term in the White House, allowing India to continue developing the Chabahar Port despite the US sanctions on Iran.

But, soon after returning as the 47th US president, Trump had issued an executive order asking Rubio to modify or rescind the exemptions to the sanctions imposed on Iran, particularly the waivers providing the Islamic Republic of West Asia “any degree of economic or financial relief”, including the one related to the Chabahar Port project.

Chabahar is a deep-water port in the Sistan-Baluchistan province of Iran. It is the closest to India among all the ports of Iran and is located in the open sea, providing easy and secure access for large cargo ships. In May 2015, India and Iran signed an MoU on partnership in the development of the port. This was followed by the signing of a Trilateral Agreement in May 2016 between India, Iran and Afghanistan to establish the International Transport and Transit Corridor. The India Ports Global Limited, through its wholly owned subsidiary India Ports Global Chabahar Free Zone (IPGCFZ), took over the operations of the Chabahar Port on December 24, 2018. On May 13, 2024, the IPGL signed a 10-year contract with the Ports and Maritime Organisation (PMO) of the Islamic Republic of Iran for equipping and operating the Shahid Beheshti Terminal of Chabahar Port. India has already supplied port equipment worth about $24 million to develop the Chabahar Port.

he Economic Survey 2024-25 presented in Parliament of India noted that the Shahid Beheshti Terminal of the Chabahar Port connected Mumbai to Eurasia via the International North-South Transport Corridor, reducing transport costs and time, leading to a 43% increase in vessel traffic and a 34% rise in container traffic in FY24.