New Delhi: The US has extended a major relief to India, granting an exemption for continued activities at the Chabahar port terminal in Iran until at least April 2026. The waiver would expire on 29 September, President Donald Trump’s administration had said.
The sanctions waiver is key to India’s continued access and development of the Chabahar port terminal in Iran. The project is a pillar of New Delhi’s strategy to access Afghanistan, bypassing the traditional land route via Pakistan.
Back in 2013, President Barack Obama signed the Iran Freedom and Counter-Proliferation Act. It gave the US government the right to impose sanctions on Iran’s economic activities. Later in 2018, Trump 1.0 decided to apply “maximum pressure” on Iran with sanctions.
Trump’s goal in 2018 was to isolate Tehran globally over its nuclear programme. But in November that year, Trump 1.0 extended a waiver to India for its construction activities at Shahid Beheshti, one of the two terminals at Chabahar.
The US sanctions waiver in 2018 was in consideration of the strategic location and importance of the port in aiding Afghanistan’s reconstruction. However, in August 2021, the US left Afghanistan and the Taliban recaptured Kabul, returning to power in the country. Thereafter, the waiver to operate the Chabahar port project was expected to be rescinded.
In February this year, Trump directed his administration to “modify or rescind” the sanction exemptions, which raised concerns in India. In September, the waiver was rescinded. The latest development has now reversed that move.
The development of the port is one of the few remaining economic linkages between India and Iran. This is especially significant against the backdrop of the UN sanctions on large sectors of the Iranian economy.
Other economic links
In the 2018-2019 financial year, before the imposition of Trump 1.0’s sanctions, India had purchased roughly $12.37 billion worth of hydrocarbons from Tehran. India stopped purchasing crude from Iran amid the imposition of US sanctions on Iran under Trump 1.0.
Since then, the price of Indian merchandise imports from Iran has dropped below $1 billion annually. Tehran has been seeking to find a mechanism to work within the sanctions framework and resume oil trading with India. An avenue is creating petrochemical factories in the vicinity of the Chabahar port, as reported earlier by ThePrint.
China, meanwhile, has stepped in, importing oil from Iran.
The idea behind the Chabahar port project was to boost trade and connectivity between India and the Central Asian nations.
The port of Chabahar is located on Iran’s southeastern coast along the Gulf of Oman. It sits a mere 172 km away from Pakistan’s Gwadar port, built previously with aid from China, and roughly 950 km from the Afghanistan border. The port encompasses a 7,200-km-long multimodal transport corridor, connecting Western ports to Russia via countries in Central Asia and the Caucasus regions.
More than five million tonnes of bulk cargo had been transited through the Chabahar port by May 2024. India Ports Global Private Limited is a State-owned company, managing the port via its wholly owned subsidiary. The subsidiary has been managing the port since December 2018 and is known as India Ports Global Chabahar Free Zone.
In May 2024, India and Iran signed a 10-year agreement to allow India Ports Global Private Limited to manage and operate the Chabahar port. Under the older mechanism, the contract had to be renewed every year.
India has also been pushing to link the port to the larger International North-South Transport Corridor. This demand was reiterated by National Security Adviser Ajit Doval in 2023 at the NSA-level meeting of the Shanghai Cooperation Organisation.
(Edited by Madhurita Goswami)