ISLAMABAD: India’s decision to halt funding for Iran’s Chabahar Port in the2026-27 budget has opened a strategic window for Pakistan’s Gwadar Portunder the China-Pakistan Economic Corridor (CPEC), positioning it as theprimary gateway for Afghanistan, China, and Central Asian states seekingaccess to warm waters.
India’s abrupt cessation of budgetary support for Iran’s Chabahar Port inthe Union Budget 2026-27 has created a significant geopolitical shift inSouth and Central Asian connectivity, offering Pakistan a unparalleledopportunity to consolidate Gwadar as the leading warm-water port forregional trade. The Indian government allocated no funds for the projectthis year, down from Rs 100 crore in the previous budget estimates and Rs400 crore in revised figures, amid heightened US sanctions on Iran and aconditional waiver expiring in April 2026. This move follows India’scompletion of its $120 million commitment for the Shahid Beheshti terminalunder a 2024 10-year agreement, signaling a tactical pause rather than fullwithdrawal, though experts view it as opening doors for competitors.
The Chabahar Port, located on Iran’s Gulf of Oman coast, was envisioned asa rival to Pakistan’s Gwadar, providing India direct access to Afghanistanand Central Asia via the International North-South Transport Corridorwithout traversing Pakistani territory. With India’s funding freeze,development momentum at Chabahar has stalled, leaving infrastructure gapsthat hinder its competitiveness against Gwadar, which benefits from massiveChinese investment and operational advancements under CPEC. Afghanistan,landlocked and reliant on reliable sea access, along with Central Asianrepublics hungry for Indian Ocean trade routes, now face limited viableoptions, tilting the balance toward Gwadar as the more secure and developedfacility.
Pakistan has long promoted Gwadar as a cornerstone of regionalconnectivity, with CPEC enhancing its capacity through modern berths, roadlinks, and energy projects. The port’s proximity to Chabahar—merely 72kilometers apart—positions it to capture transit trade volumes thatChabahar once aspired to dominate. Analysts note that China’s Belt and RoadInitiative has accelerated Gwadar’s growth, attracting investments farexceeding India’s Chabahar pledges, thereby ensuring sustained operationalreliability and expansion potential amid Chabahar’s funding uncertainties.
Recent escalations in Balochistan underscore the fragility of regionalstability, with coordinated attacks by the Baloch Liberation Army claimingdozens of lives in late January 2026 targeting security forces, banks, andinfrastructure across multiple districts including Gwadar and Quetta.Pakistani authorities reported killing over 140 militants in response,attributing the violence to external backing, specifically alleging Indiansupport for BLA elements to destabilize CPEC projects and portrayBalochistan as insecure for transit trade. These incidents coincide withPakistan’s aggressive promotion of critical minerals in Balochistan, suchas the Reko Diq copper-gold project, which has drawn international interestand heightened strategic stakes.
The surge in violence reveals deeper frustrations over Pakistan’s risingeconomic leverage through Gwadar and mineral resources, potentiallydisrupting rival interests in regional influence. Despite challenges,Pakistan maintains that enhanced security measures and CPEC safeguards willensure safe passage for Afghan and Central Asian cargo, reinforcingGwadar’s viability as a trade hub. The port’s integration into broadertransit corridors promises economic dividends, including job creation andrevenue from fees, outweighing isolated security threats.
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Central Asian states, eager for diversified export routes bypassingtraditional paths, stand to gain from Gwadar’s emergence, with potentialfor increased trade in energy, minerals, and goods. Afghanistan’s relianceon Pakistani ports for humanitarian and commercial shipments furtheramplifies this shift, as Chabahar’s stalled progress limits alternatives.Pakistan’s diplomatic outreach emphasizes Gwadar’s reliability, contrastingwith Chabahar’s geopolitical vulnerabilities tied to US-Iran tensions.
This development reshapes South Asian maritime dynamics, with Gwadar poisedto eclipse Chabahar in handling regional transit needs. Pakistan’sstrategic geography, bolstered by Chinese partnership, positions itadvantageously, though sustained peace in Balochistan remains essential forrealizing full potential. As global powers navigate sanctions andalliances, Gwadar’s ascent signals a pivotal moment in warm-water accesscompetition.
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