US Tariff Threat: India Mulling Options to Withdraw from Chabahar Port Project
NEW DELHI, Jan 16: 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% additional tariff on countries doing business with Tehran.
India is a major partner in development of the Chabahar port, located in the Sistan-Balochistan province Iran’s southern coast. In September last year, the U.S. 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.
External Affairs Ministry spokesperson Randhir Jaiswal on Friday said New India was engaged with the U.S. 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.
“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,” Mr Jaiswal said.
Mr Jaiswal also mentioned India’s long-standing relations with Iran and said New Delhi was closely following the evolving situation in the country. Iran has been witnessing massive anti-government protests in which over 2,500 people were killed.
It is learnt that India is in the process of transferring approximately $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. 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. As tensions between Washington and Tehran escalated again, President Donald Trump announced a fresh 25% tariff on countries doing business with Iran.
The new tariff is likely to have a “minimal impact” on India, government sources had said. Mr Jaiswal said the volume of two-way trade between India and Iran was $1.6 billion last year. Out of the total, India’s exports was to the tune of $1.2 billion and import was of $0.4 billion.
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. Mr Jaiswal also said the Indian embassy in Tehran was 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,” he said. “Approximately 9,000 of our citizens are currently residing in Iran. The majority of them are students,” he said.
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.
(Manas Dasgupta)
