Is India’s Chabahar dream in Iran dead?

Chabahar offers an escape: it is located about 140km (87 miles) west of Gwadar and is also a deep-water port on the Gulf of Oman. It gives India a strategic presence that mitigates the risks posed by Gwadar by outflanking it.

The Chabahar port is also the southern node of the International North-South Transport Corridor (INSTC) — a 7,200km (4,474-mile) network of railroads, highways and maritime routes that connects Russia and India through Iran.

“Chabahar is important for India’s connectivity endeavours in Central Asia, a region not easily accessible for New Delhi,” said Kabir Taneja, a fellow at the India-based Observer Research Foundation think tank.

“The Iranian port, and the attached INSTC corridor, offers both a core investment with Iran and access to geographies, including Afghanistan, that are looking to diversify their access to coastlines and ports,” Taneja told Al Jazeera.

While India and Iran first agreed to develop the port in 2003, the waves of US sanctions on Iran that followed halted any progress. The talks were revived after Washington eased sanctions under the 2015 Iran nuclear deal.

In 2016, India’s Prime Minister Narendra Modi visited Tehran, announced a plan to build and operate the key Chabahar port after meeting then-President Hassan Rouhani, and pledged to invest $500m to develop the strategically important port.

It became minimally operational before US President Donald Trump withdrew from the nuclear deal in 2018 during his first term, and sanctioned Iran again. But India soon secured a sanctions exemption from Trump to continue developing Chabahar. Afghanistan was at the time ruled by a US-backed government that needed Indian aid shipped through Chabahar.

Since the Taliban came to power in Kabul in 2021, bilateral relations between Afghanistan and Pakistan have hit rock bottom, often spilling into fighting along the border.

Is Chabahar port sanctioned now?

Despite Trump’s “maximum pressure” policy to choke Iranian revenue streams, the US Treasury Department had initially exempted Chabahar from sanctions in 2018. This was during Trump’s first term.

But in September 2025, the second Trump administration announced that it was revoking all exemptions to Iran-related sanctions, including for Chabahar. India lobbied and got the Chabahar exemption extended until April 26, 2026, after reportedly promising to wind down operations there.

India also paid $120m in promised investments in February this year, raising criticism from opposition parties that accused Modi’s government of buckling under US pressure to abandon a vital strategic project.

“To now hear that India has unceremoniously retreated from Chabahar at the first hint of pressure from the United States represents a new low in this government’s conduct of foreign policy,” Pawan Khera, a spokesperson for the Indian National Congress, India’s main opposition party, had said then.

“For how long will the Government of India allow Washington to dictate our national interests?”

After the waiver expired on Sunday, Randhir Jaiswal, a spokesperson for India’s Ministry of External Affairs, told reporters in the national capital that New Delhi is discussing the issue with Tehran and Washington.

“Obviously, the current conflict is also a complicating factor,” Jaiswal added, referring to the ongoing war.

Indian Prime Minister Narendra Modi and US President Donald Trump hold a joint news conference at the White House in Washington, DC, on February 13, 2025 [Andrew Caballero-Reynolds/AFP]

What are India’s options now?

Last year, a day before the US sanctions were to kick in — before the waiver was extended — the New Delhi-appointed officials of India Ports Global Ltd (IPGL), which manages the Chabahar port, resigned, and its website was taken down.

In February this year, the Indian government did not allocate any money for Chabahar in its annual budget, in the first such omission in nearly a decade.

Rajan Kumar, a professor of international studies at New Delhi’s Jawaharlal Nehru University, told Al Jazeera that India has no other option but to wait for the hostilities to end in the Middle East.

“Until the time conflict ends and Iran remains under heavy sanctions, India does not have much of a choice,” said Kumar.

New Delhi has reportedly been looking to transfer the stake of government-owned IPGL Chabahar Free Zone to an Iranian entity for operations. However, no deal has been reached yet. Such a transfer could allow India to return to its role in managing port operations whenever sanctions are lifted on Iran in the future, analysts say.

“Chabahar has really become a losing bet over the last few years. In that sense, it’s really a damaged asset,” said Michael Kugelman, a resident senior fellow for South Asia at the Atlantic Council.

“There could be scenarios later when India could pick an opportunity, but with the war in Iran, and the likely possibility of continued tensions with the US, the ties will remain extremely fraught,” he told Al Jazeera.

So, India would face a difficult sanctions challenge with the Chabahar port if it were to move forward with it, said Kugelman. “It would be increasingly difficult for it to avoid the risk of the US sanctions.”

At best, Kugelman said, India will play a long game and look to return to the Chabahar port later. At worst, he added, “New Delhi would conclude that it needs to swallow its losses and back out.”

However, Anwar Alam, a senior fellow at the Policy Perspective Foundation, a think tank in New Delhi, said India’s ultimate decision on Chabahar would hinge on its priorities.

India can manage sanctions and strike a deal with both the US and Iran without necessarily exiting Chabahar, he said.

“But if keeping Trump and [Israeli PM Benjamin] Netanyahu in good mood is of greater priority for the Indian government, more so than retaining control of Chabahar, then an exit is the only option,” Alam told Al Jazeera.