In a significant diplomatic relief, President Donald Trump’s administration has extended the sanctions waiver for India’s operations at Iran’s Chabahar Port until at least April 2026. The waiver, initially set to expire on 29 September 2025, ensures India’s uninterrupted engagement in the strategic port project, a vital component of its regional connectivity strategy.

The Chabahar Port, located on Iran’s south-eastern coast along the Gulf of Oman, is the cornerstone of India’s plan to access Afghanistan and Central Asia while bypassing Pakistan. Managed by India Ports Global Private Limited (IPGPL), through its subsidiary India Ports Global Chabahar Free Zone, the port plays a crucial role in India’s regional outreach and trade ambitions.

The port connects a 7,200-kilometre-long multimodal transport corridor linking Western Indian ports to Central Asia and Russia. Its proximity—just 172 km from Pakistan’s China-supported Gwadar Port—adds to its strategic leverage for India in regional maritime affairs.

The U.S. sanctions regime stems from the 2013 Iran Freedom and Counter-Proliferation Act, enacted under President Barack Obama. The legislation empowered Washington to impose penalties on nations engaging with Iran’s economy. Under Trump’s first term in 2018, the administration escalated pressure on Tehran through the “maximum pressure” sanctions campaign targeting Iran’s oil and infrastructure sectors.

However, recognising the Chabahar project’s role in supporting Afghanistan’s reconstruction, the U.S. extended a conditional waiver to India, allowing construction and administrative activities at the Shahid Beheshti terminal. This decision was seen as a balancing act between Washington’s geopolitical aims and regional stabilisation efforts.

In February 2025, reports surfaced that President Trump had directed his administration to “modify or rescind” existing exemptions related to Iran, creating unease in New Delhi. The waiver was subsequently withdrawn in September.

The latest reversal by the Trump 2.0 administration signals a recalibration of U.S. policy, acknowledging India’s strategic necessity in maintaining an operational foothold in Chabahar.

Before the 2018 sanctions, India’s annual crude oil imports from Iran stood at approximately $12.37 billion. Following the sanctions regime, that figure plunged below $1 billion annually. Efforts to restore some economic linkage now focus on establishing petrochemical industries near Chabahar to facilitate limited, sanction-compliant trade between India and Iran.

Meanwhile, China has deepened its economic footprint by continuing to import Iranian oil, thereby expanding its influence in the Gulf region. The contrast underscores India’s need to retain its engagement in Iranian infrastructure to balance Chinese presence and secure its northern trade routes.

By May 2024, the Chabahar Port had handled over five million tons of bulk cargo, highlighting its growing role in regional logistics. In May that year, India and Iran signed a 10-year agreement granting IPGPL management and operational rights, replacing the earlier annual renewal model that caused uncertainty in long-term planning.

India has also been driving efforts to integrate Chabahar into the broader International North–South Transport Corridor (INSTC), connecting Mumbai to Russia via Iran and Central Asia. National Security Adviser Ajit Doval reiterated this ambition during the Shanghai Cooperation Organisation’s NSA-level meeting in 2023, emphasising the project’s potential to redefine Eurasian connectivity.

The U.S. waiver extension consolidates a pragmatic understanding between Washington and New Delhi amid evolving global alignments. While sanctions continue to constrain much of Iran’s economy, the exemption ensures that India can pursue a calibrated engagement balancing Western sanctions compliance and its regional connectivity ambitions.

IDN (With Agency Inputs)