As the geopolitical situation eases and if sanctions on infrastructure are lifted, India would look at ways to remain engaged and operate the terminal given its strategic significance, said the first person quoted earlier, speaking on the condition of anonymity. India’s infrastructure at the Iranian port did not face restrictions even when Iran was under the US sanctions earlier.
However, apart from the $120 million invested in the Shahid Beheshti terminal, India will make no further investment until the geopolitical flare-up eases, the person said. India has committed an additional $250 million credit line to Iran to develop infrastructure.
The Iranian port is close to the China-operated Gwadar Port in Pakistan. Chabahar is important for India as it provides direct access to Afghanistan and Central Asia, bypassing Pakistan, besides countering Chinese and Pakistani influence in the region.
In May 2024, India and Iran signed a 10-year long-term main contract, under which state-run Indian Ports Global Ltd (IPGL) was required to operate five berths, invest, and extend credit lines.
“India doesn’t plan to completely exit Chabahar. The investment commitment has been completed. Although further investment is unlikely in the near term. But India is very much committed to the port infrastructure,” said the first person quoted above.
Queries emailed to India’s ministries of ports, shipping and waterways, external affairs, and the Iranian Embassy in New Delhi on Monday remained unanswered until press time.
On 5 and 6 February, minister of state for external affairs Kirti Vardhan Singh informed the upper house of Parliament in a written reply that the government has completely paid up its commitment of $120 million for Chabahar port, well before the US sanctions waiver ends in April.
The government did not allocate any funds for the Chabahar port in the Union budget for 2026-27. About ₹400 crore was allocated for the project in the 2025-26 budget.
“Chabahar Port has moved decisively from a strategic concept to a stable, operational, and commercially viable port, and today stands as India’s most important overseas port project,” said the second person cited, who also did not want to be identified.
Since IPGL operationalized the Shahid Beheshti terminal in 2018, cargo volumes at the port have grown. Data from India’s shipping ministry showed that in FY25, it handled over 80,000 20-foot equivalent (TEU) of container traffic, up from 60,000 TEUs in the previous year, along with more than 1.2 million tonnes of bulk and general cargo.
China’s shadow
India has been among Iran’s five largest trade partners in recent years. Major Indian exports to Iran include rice, tea, sugar, pharmaceuticals, manmade staple fibres, electrical machinery, and artificial jewellery, among others, while major Indian imports from Iran include dry fruits, inorganic or organic chemicals and glassware, among others.
“US-Iran tensions have always cast a spell on the bilateral ties of several countries with Iran. India’s position regarding the Chabahar port has been that it provides allows regional public good and India has so far been able to convince successive US administrations of this wider goal,” said Harsh V. Pant, vice-president of Observer Research Foundation and professor of international relations with King’s India Institute at King’s College London.
“If India exits the key port, who would replace it. It may be China,” Pant said, adding that the US must decide whether it wants China to become the dominant player in Iran. Yet, unless there is rationalization in Iran’s foreign policy, India may not be able to reap the maximum potential benefits of the port as global companies may not access it amid Iran’s global isolation.
The board of IPGL, the joint venture of Jawaharlal Nehru Port Trust (JNPT) and Kandla Port Trust (KPT), formed under the aegis of the shipping ministry, has resigned after lifted waiver on sanctions, ETInfra reported.
“As sanctions by US OFAC (Office of Foreign Assets Control) also include personal liabilities, officials of the company have resigned,” said a third person aware of the development.
According to details from the shipping ministry, IPGL’s operations at the port have turned around from initial losses, recording around ₹16 crore profit in FY24.
“As sanctions by US OFAC (Office of Foreign Assets Control) also include personal liabilities, officials of the company have resigned,” said a third person with knowledge of the developments.
Speaking over the phone, Sunil Mukundan, former managing director of IPGL, who resigned in September, directed Mint to the shipping ministry for information on the issue.
Emerging north-south corridor
Iran has an extensive plan to expand the port, including four rail-mounted quay cranes, 16 rubber-tired gantry cranes, yard expansion, and terminal automation, to enhance Chabahar’s container-handling capacity to 500,000 TEUs annually in the medium term. The port is being integrated with road and rail connectivity through Zahedan, enabling seamless access to Afghanistan, Central Asia, and the countries of the Commonwealth of Independent States, emerging as a major node of the International North-South Transport Corridor.
Chabahar will be developed in five phases into a 32-berth port with a capacity of 100 million tonnes per annum, covering container, multipurpose, oil, and dry bulk terminals, according to Iranian authorities’ long-term plans.
“This rich heritage is a valuable asset for expanding bilateral cooperation,” Iran’s Ambassador to India, Mohammad Fathali, said while addressing Iranian National Day celebrations in New Delhi on Monday. “The Chabahar Port project, as a symbol of the cooperation between our two countries, plays an important role in the common development and regional connectivity.”