Chabahar Port Diplomacy: India's Balancing Act Between U.S. Sanctions and Strategic Interests in Iran

Source: The Hindu 

Introduction 

On January 17, 2026, India's Ministry of External Affairs confirmed that discussions on Chabahar port operations in southeastern Iran will continue with both the United States and Iran, despite heightened tensions following U.S. President Donald Trump's recent tariff announcement. The statement by MEA spokesperson came amid growing concerns about India's strategic investments in Chabahar port being caught in the crossfire of renewed U.S.-Iran tensions. 

• On January 12, 2026, Trump announced a sweeping new tariff policy imposing an additional 25% tariff on any country that maintains trading ties with the United States while also conducting trade with Iran.  
• This announcement brought India's relationship with Iran under renewed scrutiny, particularly regarding the Chabahar port project—a strategic infrastructure investment that New Delhi had received an exemption for from the previous Trump administration. 
• India's diplomatic balancing act reflects the complex challenge of maintaining strategic autonomy while managing relations with both a key security partner (the United States) and a historically important neighbour (Iran) with whom it shares decades-long economic and strategic ties. 

What is India's Position on Chabahar Operations? 

MEA Official Statement: 

• MEA spokesperson addressed media speculation about India ending Chabahar port operations 
• Confirmed India has an active U.S. sanctions waiver valid until April 26, 2026 
• Described India-Iran relationship as "long standing" with plans for high-level diplomatic engagements. 

Sanctions Waiver Status: 

• India possesses a conditional waiver from U.S. Department of Treasury specifically for Chabahar port. 
• Waiver remains valid through April 26, 2026. 
• Provides diplomatic window for negotiations and strategic planning. 

Correction of Media Reports: 

• Recent media speculation about winding up operations was inaccurate. 
• Reports failed to account for ongoing India-Iran dialogues on port and regional connectivity issues. 
• Multiple "difficult issues" remain under discussion between both countries. 

India-Iran Relations Context: 

• Bilateral relationship has evolved over decades. 
• Iran has historically navigated various western sanctions regimes. 
• Relationship has demonstrated resilience despite external pressures. 
• India continues to maintain strategic engagement with Tehran.

Timeline of Events 

Understanding the Chabahar Port Issue 

Strategic Importance and Operations: 

• Chabahar port, situated on Iran's southeastern coast along the Gulf of Oman, represents a critical strategic asset for India.  
• The port provides India with direct maritime access to Afghanistan and Central Asia while bypassing Pakistan, which has denied India overland transit rights. 
• This geographic advantage makes Chabahar India's primary trade corridor to Afghanistan and a vital link in the International North-South Transport Corridor (INSTC), connecting India to Russia and Europe through Iran and Central Asia. 
• India has committed $500 million to develop port infrastructure, including container terminals, cargo handling facilities, and logistics infrastructure. India Ports Global Limited (IPGL) operates the Shahid Beheshti terminal under a 10-year lease agreement signed in 2018.  
• The port also serves as a strategic counterweight to China's development of Gwadar port in Pakistan, located just 100 kilometers away.  
• Beyond commercial considerations, Chabahar has facilitated humanitarian aid shipments to Afghanistan, including wheat and medical supplies, particularly crucial after the Taliban's return to power in 2021. 

U.S. Sanctions Regime and India's Exemption: 

• The United States has maintained sanctions against Iran since 1979, intensifying them over concerns about Iran's nuclear program, terrorism support, and human rights violations.  
• After the Trump administration withdrew from the Joint Comprehensive Plan of Action (JCPOA) in May 2018, comprehensive sanctions were reimposed.  
• These include secondary sanctions that target non-U.S. entities engaging with Iran, effectively forcing countries to choose between economic relations with Iran or the United States. 
• The U.S. granted India a conditional exemption for Chabahar operations, recognizing the port's humanitarian benefits and its potential to provide Afghanistan with an alternative trade route, reducing Afghan dependence on Pakistan.  
• This exemption requires India to limit operational scope, maintain transparency with U.S. authorities, and ensure the port isn't used contrary to U.S. interests. The U.S. Treasury's Office of Foreign Assets Control (OFAC) oversees compliance and can modify or revoke exemptions. 

Trump's 2026 Tariff Policy: 

• President Trump's January 12, 2026 announcement introduced a new approach—using tariffs rather than traditional sanctions.  
• Countries maintaining trading relationships with both the United States and Iran would face an additional 25% tariff on exports to the U.S. This broad application creates systemic economic pressure, forcing stark choices between Washington and Tehran. 
• This policy raises significant international law questions regarding WTO compatibility, particularly concerning Most Favored Nation (MFN) principles and national treatment obligations.  
• While the U.S. may invoke GATT Article XXI's national security exception, this remains legally contentious. The policy also highlights concerns about extraterritorial jurisdiction and sovereignty under international law. 

India's Diplomatic Balancing Act: 

• India faces complex diplomatic challenges in balancing its relationships with Washington and Tehran.  
• The U.S.-India strategic partnership encompasses defense cooperation, technology sharing, and bilateral trade exceeding $190 billion. Simultaneously, India and Iran share civilizational links and common interests in Afghanistan's stability and regional connectivity. 
• India's foreign policy doctrine emphasizes strategic autonomy—making independent decisions based on national interests rather than bloc alignment. However, India has demonstrated flexibility, reducing Iranian oil imports to nearly zero after 2019 when U.S. waivers expired. 
• The Afghanistan dimension adds complexity. Following the Taliban's takeover in August 2021, Chabahar became even more critical for India's humanitarian assistance and regional influence. Pakistan's transit denial makes Chabahar the only viable route for Indian goods and aid to Afghanistan.

What are the Related International Legal Principles? 

Sovereignty and Non-Interference: 

• The principle of sovereign equality under the UN Charter (Article 2) recognizes each state's right to conduct its foreign policy without external interference, though this is increasingly challenged by economic interdependence and secondary sanctions. 

Extraterritorial Application of Domestic Law: 

• U.S. secondary sanctions represent an extraterritorial application of American domestic law, requiring non-U.S. entities to comply with U.S. policy or face penalties—a practice that has generated significant international legal debate. 

Pacta Sunt Servanda: 

• This fundamental principle of international law requires that treaties and agreements must be honored. India's 2016 agreement with Iran on Chabahar creates binding obligations that cannot be unilaterally abandoned without legal consequences. 

Economic Coercion in International Relations: 

• The use of economic measures to compel policy changes by other states raises questions about coercion in international law, though there is no absolute prohibition on economic pressure. 

Conclusion 

• India's January 17, 2026 statement by MEA spokesperson Randhir Jaiswal reflects a carefully calibrated diplomatic position: acknowledging the U.S. tariff policy and sanctions framework while affirming India's commitment to maintaining its strategic interests in Chabahar port. The confirmation that India's sanctions waiver remains valid until April 26, 2026 provides a crucial window for diplomatic negotiations. 
• The Chabahar port issue epitomizes the challenges faced by middle powers in an increasingly polarized international system. India's predicament—caught between a vital security partner in the United States and a strategically important neighbor in Iran—illustrates how major power competition can constrain the foreign policy options of other nations. 
• The coming months will test India's diplomatic skill in navigating these competing pressures. The scheduled meetings between Indian officials and their American and Iranian counterparts will be critical in determining whether India can maintain its strategic investment in Chabahar while managing its relationship with Washington. The outcome will have implications not only for India's connectivity to Afghanistan and Central Asia but also for the broader principle of strategic autonomy that has long guided Indian foreign policy.