NEW DELHI: India’s key strategic connectivity project to Afghanistan and Central Asia faces a new challenge as the United States announced it will revoke the sanctions exemption for operations at Iran’s Chabahar Port from September 29.
The move potentially exposes Indian firms involved in the port’s development and operation to US penalties, raising serious concerns about the future of one of India’s most important regional connectivity projects.
The waiver originally granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), had allowed India and others to work on the port without facing the threat of American sanctions. It was seen as a vital exception for India’s effort to bypass Pakistan and establish alternative trade and transit routes to landlocked Afghanistan and Central Asia.
The Chabahar Port, situated on the Gulf of Oman, has handled more than 8 million tonnes of cargo since India took operational control of its Shahid Beheshti terminal through India Ports Global Limited. It has also served as a lifeline for delivering humanitarian aid to Afghanistan, especially after the Taliban takeover during critical times.
However, the US State Department now finds that this exemption no longer aligns with its current policy.
“Consistent with President Trump’s maximum pressure policy to isolate the Iranian regime, the Secretary of State has revoked the sanctions exception for Afghanistan reconstruction assistance and economic development,” the US State department said in a statement.
“Persons who operate the Chabahar Port or engage in other activities described in IFCA may expose themselves to sanctions,” it further said.
Washington cited the port’s growing commercial and strategic relevance to Iran, and broader concerns over illicit financial flows tied to Tehran’s military and defense networks. The US Treasury on Tuesday had sanctioned over a dozen Iranian individuals and entities in Hong Kong and the UAE accused of moving money to the Islamic Revolutionary Guard Corps (IRGC).
“Iranian shadow banking networks like these run by trusted illicit financial facilitators abuse the international financial system and evade sanctions,” said John K Hurley, US Treasury undersecretary for terrorism and financial intelligence.
The announcement marks a shift in how Washington now views the port. Originally, the waiver was justified by Chabahar’s role in supporting Afghanistan’s reconstruction under an elected government. With the Taliban now in control, and India recently signing a 10-year agreement to expand the port and integrate it into the International North-South Transport Corridor (INSTC), US officials believe the port may serve as a commercial lifeline for Tehran.
There was no immediate response from the Indian government. But the MEA has maintained that Chabahar is a “vital connectivity project” that enhanced regional trade.