US Tariffs Raise Doubts Over India’s Chabahar Port Investment

New 25% US tariffs on countries doing business with Iran have cast doubt over India’s Chabahar port project, balancing strategy and Washington pressure.

India faces uncertainty over its investment in Iran’s Chabahar port after the Trump administration imposed new 25% tariffs on nations engaging economically with Tehran.

The project, a collaboration between India, Iran, and Afghanistan, is vital for India’s access to Afghanistan and Central Asia without passing through Pakistan.

India had committed around $500 million for the port’s development, including linked road and rail infrastructure to Afghanistan, aiming to strengthen regional trade and reduce dependency on Pakistan routes.

US sanctions against Iran have long complicated the Chabahar project. While Washington granted occasional exemptions, its 2018 withdrawal from the Iran nuclear deal increased uncertainty over the port’s operations.

Recent developments saw India transfer $120 million of its committed funds to Tehran while signaling to the US Treasury a potential reduction of its operational activities at the port.

Despite this, Indian officials insist that exiting Chabahar is not an option. Delhi is exploring alternative financing mechanisms to sustain the project while managing US pressure.

Chabahar remains strategically critical for India, as it provides the only practical land-access route to Afghanistan and Central Asia, crucial for India’s regional influence and trade expansion.

India has also strengthened ties with the Middle East, particularly the UAE, and joined initiatives such as the India–Middle East–Europe Economic Corridor and I2U2, potentially providing alternative routes to meet strategic needs.

Currently, India is likely to maintain involvement in Chabahar through indirect participation and continued diplomatic efforts, aiming to protect strategic interests while seeking an extension of US sanction exemptions.

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