US withdraws sanctions waiver on Iran’s Chabahar Port, India’s connectivity plans affected

In a fresh diplomatic setback for India, the United States has withdrawn the sanctions waiver that had allowed India to continue work on Iran’s Chabahar Port project, as per reports. 

The waiver, first granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), will officially lapse on September 29, effectively bringing India’s development plans for the port under the risk of US penalties.

The exemption was critical for India as Chabahar is viewed as a strategic hub for access to Afghanistan and Central Asia, bypassing Pakistan. With the waiver now revoked, Indian firms and officials involved in the project could face exposure to secondary sanctions.

In a statement released on September 16, the US State Department said the decision aligns with Washington’s broader “maximum pressure” policy aimed at further isolating Tehran. It cautioned that entities continuing operations at the port or participating in related projects may now be sanctioned under IFCA provisions.

The move comes at a sensitive time for India. On the same day the waiver was rescinded, New Delhi and Washington resumed long-delayed discussions on a bilateral trade agreement. Meanwhile, Indian exporters are already grappling with steep tariff hikes up to 50% on several labour-intensive goods imposed by the US since August 27 threatening nearly $86.5 billion worth of shipments to America, India’s largest trading partner.