India mulls options on Iran's Chabahar port project amid US tariff threat

India is mulling various options on its engagement in the development of the strategically-located Chabahar port in Iran against the backdrop of the Trump administration threatening a 25 per cent additional tariff on countries doing business with Tehran.

India is a major partner in the development of the Chabahar port, located in the Sistan-Balochistan province on Iran's southern coast.

In September last year, the US imposed crippling economic sanctions on Iran but had granted India a six-month exemption from the punitive measures on the Chabahar port project. The waiver will come to an end on April 26.

‘New Delhi engaged with US on the issue’

External Affairs Ministry spokesperson Randhir Jaiswal on Friday (January 16) said New Delhi is engaged with the US on the issue.

His remarks in answering a question came amid reports that New Delhi is looking at withdrawing from it in view of fresh American tariffs on nations having trade relations with Iran.

Also Read: Trump slaps 25 pc tariff on 'any country' trading with Iran; India to face fallout

"As you are aware, on October 28, the US Department of Treasury had issued a letter outlining the guidance on the conditional sanctions waiver valid till April 26, 2026. We remain engaged with the US side in working out this arrangement," Jaiswal said.

Jaiswal also mentioned India's long-standing relations with Iran and said New Delhi is closely following the evolving situation in the country. Iran has been witnessing massive anti-government protests in which over 2,500 people were killed.

India considering various options

It is learnt that India is in the process of transferring approximately USD 120 million - the amount it committed for the project - as part of a move to end its direct exposure to the Chabahar port project, people familiar with the matter said.

A possibility to create a new entity to carry forward the development of the Chabahar port is also being considered, they said.

This option will end the Indian government's exposure to the project, but in a way, it will ensure continuation of New Delhi's support, the people explained.

Also Read: US revokes Chabahar Port waiver, India’s deal faces sanctions risk

In September last year, the Trump administration announced its decision to revoke the 2018 sanctions waiver with regard to the Chabahar port in Iran.

Weeks after announcing the revocation of the sanctions, Washington said it was extending six months' waiver from the punitive measures to India.

New tariff announced by Trump

As tensions between Washington and Tehran escalated again, President Donald Trump announced a fresh 25 per cent tariff on countries doing business with Iran.

The new tariff is likely to have a "minimal impact" on India, government sources said on Tuesday.

Jaiswal said the volume of two-way trade between India and Iran was USD 1.6 billion last year. Out of the total, India's exports were to the tune of USD 1.2 billion and import was of USD 0.4 billion.

Multi-mode transport project

The Chabahar port is being developed by India and Iran to boost connectivity and trade ties. Both the 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.

Also Read: India to tell US the need to operate Chabahar port in Iran: Jaishankar

Jaiswal also said that the Indian embassy in Tehran is in touch with the Indians in Iran.

"We are keeping a close watch on the situation there, and as far as our citizens are concerned, we are committed to doing whatever is necessary for their well-being. Approximately 9,000 of our citizens are currently residing in Iran. The majority of them are students," he said.

Advisory to Indian nationals in Iran

India has already issued a number of advisories to the Indian nationals in view of the current situation in that country.

"In these advisories, we have advised our citizens in India not to travel to Iran at this time, and we have advised Indian citizens residing in Iran to leave the country by whatever means are available," he said.

India on Wednesday asked all its nationals currently residing in Iran to leave by available means after the security situation deteriorated further.

New Delhi also strongly advised its nationals to avoid travelling to Iran.

Also Read: Why the Chabahar port deal with Iran is strategically important for India

There has been rising tensions in Iran and the region after US President Donald Trump indicated military action if Tehran continues its crackdown on the protesters.

"If they hang them, you're going to see some things...We will take very strong action if they do such a thing," the US president told CBS News.

In a message to the protesters, Trump said on Tuesday that "help is on the way".

The protests began late last month in Tehran after the Iranian currency rial plunged to record lows. The protests have since spread to all 31 provinces, evolving from an agitation against economic woes to a demand for political change.

(With agency inputs)