ISLAMABAD: Amid escalating geopolitical tensions, India has initiated asignificant strategic retreat from its long-term involvement in Iran’sChabahar Port, succumbing to intense pressure from the United States.Recent developments indicate that New Delhi has transferred approximately$120 million to Iran to fulfill and liquidate its committed financialobligations for the project, effectively scaling back operational exposure.This move follows US President Donald Trump’s January 12 announcementthreatening a 25 per cent tariff on countries conducting business withIran, raising fears of severe economic repercussions for Indian trade withWashington. The decision underscores the challenges India faces in pursuingindependent foreign policy while maintaining vital economic ties with theUS.
The Chabahar Port project, located in Iran’s Sistan-Balochistan provincealong the Gulf of Oman, has been a cornerstone of India’s regionalconnectivity strategy since the early 2010s. Designed to provide analternative trade route to Afghanistan and Central Asia, bypassingPakistan’s ports, the initiative aimed to enhance India’s access tolandlocked markets. In May 2024, India and Iran signed a 10-year agreementgranting New Delhi operational rights over the Shahid Beheshti terminal,with commitments to invest in infrastructure development. However,persistent US sanctions on Iran, stemming from concerns over Tehran’snuclear program and recent domestic unrest, have repeatedly disruptedprogress and created uncertainty for Indian stakeholders.
The current crisis intensified in September 2025 when the US revoked alongstanding sanctions waiver for Chabahar, aligning the port with broaderrestrictions on Iran. This prompted India to secure a conditional six-monthexemption from the US Treasury Department in October 2025, valid untilApril 26, 2026, allowing limited operations during a wind-down phase.Reports suggest that India Ports Global Limited, the state entity managingthe project, has taken steps such as resignations of directors and websitedeactivation to minimize exposure to potential penalties. Despite officialdenials of a complete exit, the transfer of funds signals a pragmaticreduction in direct involvement to safeguard broader economic interests.
This development echoes India’s earlier concessions to US pressureregarding energy imports. In recent years, particularly throughout 2024 and2025, New Delhi faced similar demands to curtail crude oil purchases fromRussia amid the Ukraine conflict. Under successive US sanctions and tariffthreats, India’s Russian oil imports declined significantly, dropping byaround 38 per cent in value terms in October 2025 compared to the previousyear. Volumes fell from peaks of nearly 40 per cent of total imports tolower levels, forcing diversification toward sources like the UnitedStates, South America, and Africa. These adjustments increased import costsand highlighted the limits of India’s multi-alignment policy in the face ofsuperpower leverage.
Analysts view the Chabahar retreat as a calculated cost-benefit decision.While the port offered strategic depth against regional rivals andsupported modest trade volumes—with India-Iran bilateral trade at about$1.68 billion—the potential loss of access to the lucrative US market,through threatened 25 per cent tariffs, outweighed the benefits. TheTaliban takeover in Afghanistan further diminished the corridor’s immediateutility, compounded by ongoing internal instability in Iran. Indianofficials have emphasized continued engagement with Washington to negotiatean extension or alternative arrangement for the waiver, while stressinglong-standing ties with Tehran.
The episode raises broader questions about the erosion of strategicautonomy for middle powers like India. Critics argue that repeatedaccommodations to US demands, from oil imports to port operations, reflecta pattern of prioritizing economic stability over geopolitical ambitions.Proponents counter that such flexibility preserves larger interests in amultipolar world. As the April 2026 deadline approaches, India isreportedly exploring innovative solutions, including partnerships withregional Iranian firms, to potentially retain influence without directsanction exposure.
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The Chabahar saga illustrates the intricate interplay of sanctions,tariffs, and diplomacy in shaping global infrastructure projects. ForIndia, the port represented a decade-long investment in connectivity, yetexternal pressures have forced a reevaluation. Whether New Delhi cansalvage meaningful access remains uncertain, but the current step-backmarks a notable concession to US influence in the region.
Source:https://www.dawn.com/news/1967325/india-liquidates-chabahar-stakes-over-trumps-tariff-threat
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