Chabahar Port, a key pillar of India's connectivity strategy. (Image Courtesy: Wikimedia Commons)
Ever since India and Iran signed an inter-governmental MoU for the development of the Chabahar seaport on May 6, 2015, which is located strategically in the south of Iran, the US expansion of the port is expected to be a major component of bilateral relations. In 2016, PM Modi visited Tehran, promising India a construction of the port. The project has already helped to bring wheat and urea to Afghanistan.
On May 13, 2024, India Ports Global Limited (IPGL) inked a 10-year agreement with the Ports and Maritime Organisation of Iran (PMOI) for equipping and operating the Chabahar Port’s Shahid Beheshti Terminal. As per the provisions of the contract, India put in $120 million for the procurement of port equipment.
The clock began to tick from that point. The Trump administration revoked a special waiver it granted India in 2018 under the Iran Freedom and Counter-Proliferation Act in September 2025 to allow the country to persist in its trade with Chabahar, a port that is part of the bloc targeted by President Trump’s maximum pressure policy to isolate the Iranian regime. India’s lobbying secured a six-month conditional extension from the US beginning Oct. 29, 2025. That waiver expired on April 26, 2026. India was now having to make a strategic decision: temper its participation in the project, or risk getting slapped with U.S. sanctions.
India chose neither.
India Ports Global Limited, the project’s master developer, is selling its stake in the Indian leg of the Chabahar Free Zone project to an Iranian entity, with a reversion clause back to India when the sanctions are null and void or a fresh waiver is obtained.
THE STRATEGIC CONTEXT
The importance of Chabahar for India is mainly commercial, and the geography is what it is. Since independence in 1947, Pakistan has denied India over-land access to Afghanistan. It has been rejected by all Pakistan governments, all bilateral arrangements, and all regional connectivity efforts. What this means is that for India, a nation with trade and strategic alliances with Afghanistan and the Central Asian countries, there has been no independent land route to its vast neighbours. All corridors leading out of Iran pass through Pakistan. And Pakistan has ensured that India has paid the price for this dependence.
Chabahar is India’s solution. The port is located on Iran’s coast along the Gulf of Oman, and by road and rail, extends into the Central Asian republics via Afghanistan’s Zaranj. The port provides India access to Afghanistan and Central Asia through Iran without having to engage Pakistan, its chief rival. This is the only such route (CSEP). The alternative architectures India has pursued are not equivalent. The International North-South Transport Corridor goes through Iran but needs cooperation of Iranian infrastructure all the way. India’s only terminal on that list is Chabahar.
Trump had given New Delhi a waiver in his first term so that India could proceed with construction of the Chabahar Port despite ongoing US sanctions on Iran. But soon after returning as the 47th US president, Trump issued an executive order asking Secretary of State Marco Rubio to modify or rescind exemptions to sanctions imposed on Iran, particularly waivers providing the Islamic Republic any degree of economic or financial relief, including the one related to Chabahar.
It was not a bureaucratic revision. It was a political message, at a time when US-India relations were already under stress due to Trump tariff hikes, verbal posturing against Indian purchases of Russian oil, and Washington’s warming towards Pakistan’s military establishment since Operation Sindoor. Washington’s declaration on Chabahar was part of an arsenal of pressure. The Indians interpreted it rightly and were not fully compliant.
INDIA’S CALCULATION
Delhi’s reaction to Chabahar is being interpreted in two ways. The first view, dominant in Pakistani and some Western commentaries, is that India had blinked: the waiver ran out, India is pulling out personnel, it is transferring the operating stake, and it is cutting its financial risk. The second view, present in much of Indian commentary, is that India sat firm: the equipment remained, the contract remained, the legal position remained, and with the reversion clause, India was a step away from returning en masse.
Both readings are somewhat well-founded. What it really is: India chose the best instrument available under the circumstances, even if not the one it would have preferred. Binational talks had been used to consider the possibility of proceeding without facing US sanctions and without a private owner, having the port run directly by the Indian government. But lawyers raised concerns about how sanctions might be broadened to cover business relations related to the India-funded terminal.
The company, Sagarmala Development Corporation, which runs the terminal under IPGL’s auspices, also runs the Sittwe port in Myanmar. If sanctions extend to the company, it would impact India’s broader ambition of running international port operations. A complete walkaway, however, was not an option either. Running against US sanctions would hurt India’s corporate infrastructure essential to its port plans worldwide. The transfer-with-reversion solves both constraints.
What India is trying to guard against is its loss of a connectivity asset that is in its 20s of construction. The $120 million worth of equipment is already installed at the terminal. The operating contract with Iran’s Ports and Maritime Organisation is still alive, a legal document of 10 years. This project is at the investment point now, and the Government of India has confirmed it had no further financial commitments. The operating relationship is retained in a legal capacity even as the named operator changes.
The calculation is simple: don’t change the law, take a hit in the short run, and sit tight for a return when the sanctions environment changes.
If a ceasefire and then a deal for the US-Iran conflict comes in the next 12 to 18 months, the waiver issue resurfaces. India will re-enter in search of a walkout which it had not walked out from.
WHAT TO WATCH
India’s control over Chabahar will be decided by three signals.
1. The diplomatic trajectory of the Iran conflict.
The reversion clause in the transfer is not automatic, it comes into effect when the sanctions are lifted or a fresh waiver is obtained. Both require the US-Iran relationship to change. In April 2026, talks with Pakistan broke down. But there is pressure to return: the Hormuz closure is costing the global economy billions of dollars per week. A ceasefire will set the stage for India to come back to Chabahar. Watch whether Jaishankar initiates a formal reopening of the waiver discussion with Washington during bilateral meetings or at the BRICS forum in September.
2. Watch China.
China has been developing Iran-Central Asia rail connectivity via the same highway as Chabahar. Indian absenteeism at the terminal gives Chinese logistics forces an edge in the region, for one month at a time. As China sets up alternatives at Chabahar, India has limited time to prove it is in control at the port.
3. Watch for secondary sanctions pressure.
The transfer of IPGL’s stake is still in discussion and not yet finalised. If the US calls the transfer sanctions evasion, not compliance, India’s circumvention will unravel and Delhi will face a tough choice between an outright exit and a flagrant defiant move.
THE VERDICT
Strategic autonomy is not a doctrine, but a fundamental choice and a way of thinking. It’s a series of options entered when you are under pressure. For over a year, India has been under long-term pressure from the USA regarding Chabahar, and it did what it wanted: withdrew conditionally, extended conditionally, and then made it cease and desist. The answer has been the same from each corner, more wait, let it happen in front, safeguard the lawyers’ science of restitution.
The port which India took 20 years to build is yet not surrendered. It’s been sat on, engine running, keys in the ignition, and a contract saying it was theirs to have back if they wanted it. It’s not surrender. It’s India playing a long game over the one connectivity asset it can’t afford to miss out on.
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