India may exit Iran's Chabahar port project over US sanctions

India may exit Iran's Chabahar port project over US sanctions

India is now considering selling its stake in the Chabahar port project in Iran, after the United States sanctions waiver expired on April 26.

The US had granted a six-month extension to the waiver last October, but with its expiration, India is left with two options: exit the 23-year-old port project or continue operations at risk of American sanctions.

Transfer of stake to local Iranian company likely

According to a report by Business Standard, New Delhi is considering transferring its stake in India Ports Global Chabahar Zone to a local Iranian company.

The proposed transfer would include a clause for India to reclaim its shares when sanctions are lifted.

This comes after US President Donald Trump directed the Secretary of State in February last year to alter sanctions waivers, particularly those providing economic relief to Iran.

Strategic importance of Chabahar port for India

India sees the Chabahar port as a strategic investment to counterbalance regional power dynamics. Its proximity to Pakistan and China's Gwadar port gives it an edge.

The port is also a key link in the North-South Transport Corridor, connecting India with Central Asia, Europe, and Russia.

However, any move to dilute or exit the project could have long-term geopolitical implications for India's connectivity ambitions in Central Asia.

India negotiating interim arrangement to secure interests

Meanwhile, India is in talks with Iran to finalize an arrangement that secures its interests at Chabahar port.

The government is negotiating an interim mechanism under which a local ports authority would manage the port, with operational rights guaranteed to revert to India once sanctions are lifted.

A parliamentary panel of the Ministry of External Affairs has noted that recent developments have cast a shadow on the port's future, as per The Economic Times.

IPGL has been managing the port since 2024

India Ports Global Limited (IPGL) has been managing the port since 2024 under a 10-year agreement with Iran.

The company may route operations through a local entity while ensuring eventual transfer of rights back to India.

New Delhi has invested around $120 million in the port and extended a $250 million credit window for related infrastructure projects.