India inked a decade-long deal on Monday to manage the strategic Iranian port of Chabahar, aiming to bolster trade with Central Asia. Shortly after the agreement between India and Iran for Indian operations at Chabahar port, the US cautioned against engaging in business with Iran, citing potential sanctions. The ten-year pact, inked by India and Iran, aims to foster the sustained development of the Shahid Beheshti terminal at Chabahar port, currently operated by a subsidiary of India’s state-run India Global Ports Limited (IGPL). With plans to invest $120 million in terminal enhancements, India has also extended a credit line of $250 million to upgrade infrastructure around Chabahar.

Chabahar had previously received an exemption from US sanctions on Iran when India, Iran, and Afghanistan entered a trilateral agreement to develop the port in 2016. The US decision then was influenced by Chabahar’s potential to facilitate trade and development in Afghanistan, as well as lobbying efforts by India.

During a regular media briefing at the US State Department, deputy spokesperson Vedant Patel reiterated the enforcement of American sanctions on Iran, emphasizing the risks associated with engaging in business with Iran. He clarified that there was no exemption for the new India-Iran agreement.

Even after the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in 2018 and the imposition of fresh sanctions on Iran, the carve-out for Chabahar port remained intact.

There was no immediate response from India to the remarks made by the US State Department’s deputy spokesperson.

Both India and Iran view Chabahar, situated in Sistan-Baluchistan province, as integral to the International North–South Transport Corridor (INSTC), offering an alternative shipping route that bypasses the congested Persian Gulf and Strait of Hormuz.

Chabahar holds significant importance for India’s ambitious plans to enhance connectivity and trade relations with Iran, Afghanistan, and the landlocked Central Asian nations.

Sarbananda Sonowal, India’s Minister of Ports and Shipping, who attended the signing of the long-term agreement in Tehran, emphasized the project’s role in encouraging Indian entrepreneurs to explore the region from a long-term perspective. He highlighted the port’s integration with a special free zone and India’s incentives, including concessions on vessel-related and cargo charges, as factors that will promote trade flows through Chabahar, fostering economic growth and cooperation. Sonowal also noted the opportunity Chabahar presents for Indian businesses to expand their presence in Central Asia.