Following India’s signing of a 10-year contract to operate Iran’s Chabahar port, the US has issued a warning about its sanctions on Tehran, emphasizing that anyone considering business deals with Iran should be aware of the potential risks. New Delhi signed the contract to run Chabahar port with the goal of enhancing trade with Central Asia.

The port, located on the Gulf of Oman, will allow Indian goods to reach landlocked Afghanistan and Central Asia via the International North-South Transport Corridor, a road and rail project that bypasses Pakistan. Although India initially proposed this plan in 2003, US sanctions on Iran due to its suspected nuclear program had delayed the port’s development.

Responding to a question about India’s agreement with Iran, Vedant Patel, the deputy spokesperson for the US Department of State, told the media, “We are aware of the reports that Iran and India have signed a deal regarding the Chabahar port.

The government of India can address its own foreign policy objectives related to the Chabahar port and its bilateral relationship with Iran. From the US perspective, our sanctions on Iran remain in effect, and we will continue to enforce them.”

He added that “anyone considering business deals with Iran needs to be aware of the potential risk they are exposing themselves to and the potential risk of sanctions.” When asked if there were any exemptions for this, Patel replied, “No.”

The Chabahar port development plan involves a long-term agreement signed by Indian Ports Global Limited (IPGL) and the Port and Maritime Organisation of Iran, according to an official statement. IPGL will invest around $120 million, with an additional $250 million to be raised through debt.

The signing ceremony was attended by India’s Union Minister for Ports, Shipping and Waterways, Sarbananda Sonowal, and Iran’s Transport and Urban Development Minister, Mehrdad Bazrpash, in Tehran.

This new agreement replaces a 2016 deal, which covered India’s operations at the Shahid Beheshti terminal in Chabahar port and was renewed annually. It marks the first time India will manage an overseas port, significantly enhancing trade between India, Iran, and Afghanistan.

The Ministry of External Affairs has allocated ₹100 crore for the Chabahar Port for the fiscal year 2024-25.

The statement added, “This 10-year lease agreement further strengthens bilateral ties between the two countries, bolstering confidence and boosting trust among trading communities in the region.”

Union Minister Sarbananda Sonowal remarked at the contract signing, “With this agreement, we have established the foundation for India’s long-term involvement at Chabahar.”

Chabahar port is envisioned as a central hub for the International North-South Transport Corridor project, a 7,200-km-long multimodal transport network facilitating freight movement between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia, and Europe.

The first discussions about developing Chabahar Port took place in 2003 during Iranian President Muhammad Khatami’s visit to India. In 2013, India pledged to invest $100 million in its development. A Memorandum of Understanding was signed in May 2015, and the contract was finalized in 2016 during Prime Minister Narendra Modi’s visit to Iran.

The Kandla port in Gujarat is the closest Indian port to Chabahar, at a distance of 550 nautical miles, while Mumbai is 786 nautical miles away.

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