US revokes India's 'sanctions waiver' for Chabahar Port development

In a move that could hit India’s strategic outreach to Afghanistan and Central Asia, the United States has revoked the sanctions waiver granted to New Delhi for developing Iran’s Chabahar Port.

The waiver will lapse on September 29, bringing port operations and related activities under the ambit of American sanctions.

“Consistent with President Trump’s maximum pressure policy to isolate the Iranian regime, the Secretary of State has revoked the sanctions exception issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA),” the US State Department said in a statement.

The Chabahar project, jointly developed by India and Iran, has been a crucial link for humanitarian supplies and trade with Afghanistan, bypassing Pakistan. Washington had twice, in 2018 and 2019, formally conveyed to India that modernisation of Chabahar would be exempt from sanctions because of its role as a gateway for aid to Afghanistan.

The latest revocation was announced alongside fresh US sanctions on alleged illicit financial networks in Hong Kong and the UAE, accused of funnelling millions from Iranian oil sales to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Iran’s Ministry of Defence.

“These funds are used to support regional terrorist proxies and advance weapons systems that pose a direct threat to US forces and our allies,” the State Department said.

With the waiver gone, any entity operating at Chabahar or engaging in activities described under IFCA could now face sanctions after September 29.

Indian officials did not immediately comment on the development. However, observers warned that the move could complicate India’s regional connectivity plans and humanitarian commitments to Afghanistan, while testing New Delhi’s diplomatic balancing act between Washington and Tehran.

Strategically located on the Gulf of Oman, Chabahar has long been viewed by India as a counter to Pakistan’s Gwadar Port, operated by China. Last May, when India and Iran signed a 10-year agreement to further develop Chabahar, the US had within hours cautioned of “potential sanctions” on countries pursuing business with Tehran.

India formally took over port operations at the end of 2018, shortly after Washington assured New Delhi that Chabahar would remain exempt. The exemption was reaffirmed at the 2019 Indo-US “two-plus-two” dialogue. With Pakistan denying India transit rights into landlocked Afghanistan, the port has been a vital channel for New Delhi’s outreach.