India hopes US-Iran peace deal will sort out sanctions on Chabahar port
India poured $120 million into Iran's Chabahar port to bypass Pakistan, only to watch a temporary U.S. waiver expire and leave New Delhi frozen in place.
India is now deferring all work at Iran’s Chabahar port after the U.S. sanctions waiver expired on April 26, betting that negotiations between Washington and Tehran will magically lift the restrictions that have hobbled the project for years.
The gamble rests on hope rather than guarantees. A source tracking the matter told BusinessLine there is “no question of resuming project work” because it would trigger sanctions on Indian entities, yet New Delhi clings to the expectation that a U.S.-Iran truce will resolve everything. This is the same port India signed a 10-year agreement to operate in May 2024, committing roughly $120 million in equity and planning to raise another $250 million in debt through state-run Indian Ports Global Ltd.
Chabahar was supposed to be New Delhi’s strategic end-run around Pakistan, opening a route to Afghanistan, Central Asia, Russia, and Europe. Indian officials repeatedly reminded Washington of the port’s value, noting in a December 2025 Lok Sabha reply that the $120 million investment enabled “humanitarian and other types of emergency assistance to Afghanistan.” The Treasury Department responded with a waiver good only until April 26, 2026. That clock has now run out.
The timing could hardly be worse. On February 4, 2025, President Trump ordered the Secretary of State to review or rescind any sanctions relief that gives Iran economic breathing room, explicitly including Chabahar. Two weeks later, on February 28, 2026, the U.S. and Israel launched “Operation Epic Fury” against Iranian military and nuclear sites. Iran retaliated by closing the Strait of Hormuz, sparking a global energy crisis and what the report calls a “dual blockade.”
India’s cautious “wait and watch” posture reveals the limits of its multi-alignment strategy. For eight years it has threaded the needle through successive U.S. sanctions using carve-outs, but the latest escalation leaves no easy workaround. The source put it plainly: India wants an understanding between the U.S. and Iran that leads to the “withdrawal of sanctions. That would be an ideal situation for India.”
Whether that ideal materializes is the only question that matters now. Until then, a port critical to India’s overland access to half the Eurasian landmass sits idle, another casualty of great-power conflict in the Gulf.
Original reporting: BusinessLine.
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