The US will from September 29 revoke the exemptions from sanctions granted to Chabahar Port in Iran by the first Trump administration, jeopardising India's considerable investment in the infrastructure project that is central to many of the country's connectivity plans to Afghanistan, Central Asia and beyond.

On Tuesday, the US secretary of state revoked the sanctions exception issued in 2018 under the Iran Freedom and Counter-Proliferation Act with an eye on the development of Afghanistan.

The Trump administration had allowed India waivers to the sanctions on Iran for the development of the Chabahar Port, including the building of a railway network connecting it to landlocked Afghanistan.

Announcing the end of the exemption, the state department said: "Consistent with President Trump's maximum pressure policy to isolate the Iranian regime, the Secretary of State has revoked the sanctions exception issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA) for Afghanistan reconstruction assistance and economic development, effective September 29, 2025. Once the revocation is effective, persons who operate the Chabahar Port or engage in other activities described in IFCA may expose themselves to sanctions under IFCA."

India was yet to comment on the revocation of the exemption, as a result of which India also signed a 10-year contract with Iran in May 2024 to operate the Chabahar Port.

According to the agreement between Indian Ports Global Limited and the Port and Maritime Organisation of Iran, India has committed to investing $120 million in the development of infrastructure in the Shahid Beheshti terminal at the port and extending a $250 million credit line to Iran.

Last year, when the US under the Joe Biden administration had warned of "potential risk of sanctions" on anyone considering business deals with Iran, external affairs minister S. Jaishankar had appeared outwardly confident of bucking this on the premise that Washington has been appreciative of the larger relevance of Chabahar Port.

Responding to a query on the US warning at an event in Calcutta in mid-May 2024, Jaishankar had said: "I think it's a question of communicating and convincing and getting people to understand that this is actually for everybody's benefit. I don't think people should take a narrow view of it. And, they have not done so in the past. If you look at the US's own attitude to Chabahar in the past, the US has been appreciative of the fact that Chabahar has a larger relevance. We will work at it."

Apart from being a trading route to Afghanistan that bypasses Pakistan, Chabahar is India's answer to the China-built Gwadar Port in Pakistan's Balochistan province. The Chabahar Port was also envisaged as a key hub of the International North-South Transport Corridor — the 7,200km-long multi-modal transportation network in the works since 2000 — for moving freight between India, Iran, Azerbaijan, Russia, Central Asia and Europe.