India is in discussions with the United States to operationalise a short-term sanctions waiver that would allow it to continue its involvement at Iran’s strategically important Chabahar port, the Ministry of External Affairs said on Tuesday. The clarification follows reports suggesting that New Delhi could withdraw from the project due to US pressure, including the Trump administration’s proposed 25 per cent additional tariff on countries engaged in business with Tehran.

With Pakistan denying India overland access to Afghanistan and Central Asia, Chabahar remains India’s only practical western maritime corridor. New Delhi is a key stakeholder in the port’s development, which is located in Iran’s Sistan-Balochistan province on the country’s southern coast. External Affairs Ministry spokesperson Randhir Jaiswal said the US Treasury had issued guidance on October 28, 2025, granting a conditional sanctions waiver valid until April 26, 2026, and that India continues to engage with Washington to finalise the arrangement. The waiver, originally granted after the US imposed fresh sanctions on Iran in September last year, is due to expire later this month.

Sources said a temporary extension was earlier granted to allow India to wind down operations, but stressed that exiting the project is not an option given its strategic importance. India, they said, is working with the US to comply with sanction-related conditions, making the negotiations complex. Chabahar’s strategic significance lies in its location about 550 nautical miles from Gujarat’s Kandla port and its position outside the Strait of Hormuz, shielding it from regional conflicts. The port is a key component of the International North-South Transport Corridor, a 7,200-kilometre multimodal network linking the Indian Ocean and Persian Gulf to the Caspian Sea and northern Europe, potentially cutting transit time by around 15 days compared to the Suez Canal route.

In 2024, India signed a 10-year agreement with Iran under which India Ports Global Ltd committed investments of USD 370 million, highlighting the long-term nature of India’s engagement. The port is central to India’s connectivity and geopolitical strategy, providing access to Afghanistan and Central Asia while bypassing Pakistan, and serving as a major hub for humanitarian assistance to Afghanistan. According to people familiar with the matter, India is considering transferring around USD 120 million committed to the project and may create a new entity to continue development, a move aimed at limiting direct government exposure while ensuring ongoing support.

The US had earlier granted India a rare exemption in 2018 during the first Trump administration, allowing continued work at Chabahar despite sweeping sanctions on Iran. However, the waiver was revoked in September last year before being temporarily extended. Amid renewed tensions between Washington and Tehran, President Donald Trump announced a fresh 25 per cent tariff on countries doing business with Iran, though Indian officials have indicated the impact on India would be minimal. India-Iran bilateral trade stood at USD 1.6 billion last year, with Indian exports accounting for USD 1.2 billion and imports USD 0.4 billion. The negotiations over Chabahar are taking place as India also assesses the implications of US sanctions on Russian oil companies.