Budget 2026-27: No funds for Chabahar Port amid fresh US sanctions

No funds have been allocated in the Union Budget 2026-27 for the Chabahar port project in a major departure from the past. The development comes following the Trump administration’s fresh sanctions on Iran.

India, in the last few years, has been making an outlay an annual outlay of Rs 100 crore for the Chabahar port project in the Sistan-Balochistan province in Iran's southern coast. India is a major partner in the development of the Chabahar port.

The US, in September last year, despite imposing stringent economic sanctions on Iran, granted India a six-month exemption from the punitive measures on the Chabahar port project. The waiver is scheduled to come to an end on April 26.

‘India engaged with US on Chabahar port’

Earlier New Delhi had said that it is in touch with the US to ensure that work related to Indian projects at Iran’s Chabahar port continues under a time-bound sanctions waiver that expires on April 26 this year.

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Ministry of External Affairs spokesperson Randhir Jaiswal, addressing a weekly media briefing, said that the US Department of the Treasury had issued guidance on October 28, 2025, outlining a conditional sanctions waiver for the port project.

“The guidance on the Conditional Sanctions Waiver is valid until 26 April, 2026. We remain engaged with the US side in working out this arrangement,” he said.

‘Tracking US tariffs on Iran’s trading partners’

The MEA said it is also closely tracking developments linked to the additional 25 per cent tariffs announced by the United States, while underlining that India has a long-standing partnership with Iran.

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Earlier this week, US President Donald Trump said on Truth Social that countries doing business with Iran would face a 25 per cent tariff.

The tariff would apply to “any and all business being done with the United States of America” and would take effect immediately, he said. Iran is currently witnessing anti-government protests, which Trump has publicly encouraged, stating that the US stands ready to help.

MEA on India-Iran bilateral trade

Against this backdrop, the MEA noted that India-Iran bilateral trade stands at USD 1.6 billion, with Indian exports to Iran accounting for USD 1.2 billion and imports at USD 0.4 billion.

Reiterating the basis for India’s continued involvement at Chabahar, the ministry recalled the October 28, 2025 guidance issued by the US Treasury and said discussions with Washington are ongoing.

The backdrop

India first proposed developing the Chabahar port in 2003 to enable access to Afghanistan and Central Asia through the International North-South Transport Corridor, bypassing Pakistan. Progress had earlier slowed due to US sanctions on Iran over its nuclear programme.

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India’s role at the port is governed by a long-term agreement between Indian Ports Global Limited and Iran’s Port and Maritime Organisation, replacing the 2016 pact for the Shahid Beheshti terminal. In recent years, Chabahar has handled consignments including wheat aid to Afghanistan in 2023 and pesticide shipments to Iran in 2021.

The Chabahar port is being developed by India and Iran to boost connectivity and trade ties. Both countries are also strongly pitching for making Chabahar port an integral part of the International North-South Transport Corridor (INSTC).

The INSTC is a 7,200-km-long multi-mode transport project for moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.

(With agency inputs)