Following the April 26 expiry of the US sanctions waiver on its project activities at the Chabahar port in Iran, India is deferring action in anticipation of a diplomatic breakthrough between Iran and the US, sources have said.
New Delhi remains optimistic that the port’s status may be resolved once the two warring parties conclude their current negotiations to end hostilities.
“There is no question of resuming project work at the Chabahar port with the US waiver coming to an end on April 26 as it would lead to sanctions on Indian entities. But there is hope that the sanctions might go once Iran and the US reach a truce. The situation is still unfolding,” a person tracking the matter told businessline.
Since the US reimposed broad sanctions on Iran in 2018, India has successfully navigated these restrictions through various carve-outs and remained invested in the Chabahar port as it is of both strategic and economic significance to the country. Once completed, it would allow India to bypass Pakistan to access Afghanistan and Central Asia, all the way to Russia and Europe.
10-year pact
In May 2024, India and Iran finalised a 10-year agreement for India to operate and manage the Shahid Beheshti terminal. The deal involves an Indian investment of approximately $120 million, with an additional $250 million to be raised as debt. The agreement was formally signed by India’s state-run Indian Ports Global Ltd (IPGL) and the Port and Maritime Organisation of Iran.
However, on February 4, 2025, US President Donald Trump, soon after taking charge for a second time, mandated the US Secretary of State to modify or rescind sanctions waivers, particularly those that provide Iran any degree of economic or financial relief, including those related to Iran’s Chabahar port project.
“Government of India had invested nearly $ 120 million for the supply of equipment for the port, which was instrumental in providing humanitarian and other types of emergency assistance to Afghanistan,” the MEA confirmed in a reply to a Lok Sabha question in December 2025.
Following India’s representation for a waiver, the US Department of the Treasury, October 28, 2025, issued a letter stating that activities at the Chabahar port will not be exposed to US sanctions till April 26, 2026, the reply added.
“Now that the waiver has expired, India does not want to have a knee-jerk reaction. It will wait and watch how the situation develops between the US and Iran and if they are able to reach an understanding that would lead to withdrawal of sanctions. That would be an ideal situation for India,” the source said.
The diplomatic freeze over Chabahar Port follows the wider regional conflict that erupted on February 28, 2026, when the US and Israel launched `operation epic fury’ targeting Iranian military and nuclear facilities. The war escalated with Iran closing the Strait of Hormuz, triggering a global energy crisis and a “dual blockade” involving the US Navy.
Published on May 8, 2026