Revocation of Chabahar Sanctions Waiver: New Risks and Possibilities for Indian Businesses
New Delhi – The United States’ decision to revoke the sanctions waiver for India’s Chabahar Port project in Iran has triggered concern across Indian business and policy circles. For more than five years, the waiver provided a crucial diplomatic and commercial space, allowing India to bypass sanctions while developing the port and ensuring trade connectivity with Afghanistan and Central Asia. Its removal now places Indian businesses in a complicated position, facing both risks and unanswered questions about future opportunities.
For shipping and logistics companies, the risk is immediate. Without access to Chabahar under the waiver, insurance and freight costs are expected to rise as trade routes are diverted through longer and politically uncertain corridors. Will Indian shipping firms be able to absorb these costs, or will they lose competitiveness to rivals from China and Turkey?
Exporters and importers also face a tough road ahead. India has long relied on Chabahar to send pharmaceuticals, textiles, and agro-products to Afghanistan while importing minerals and petrochemicals from Iran. With sanctions now reinstated, will these businesses find themselves priced out of regional markets, or will new barter and local currency mechanisms emerge to keep trade alive?
For infrastructure firms, the stakes are even higher. Indian companies engaged in building the port and its linked railways must now weigh the risk of stalled contracts and financial penalties. Could India’s investments be sidelined, creating space for Beijing’s Belt and Road projects to take over, or will New Delhi succeed in negotiating a special exemption to protect its strategic interests?
The banking and finance sector faces the challenge of compliance. With dollar-based transactions likely blocked, can Indian banks and traders realistically rely on rupee-rial arrangements without attracting global scrutiny? Or will businesses be forced into informal channels, raising legal and reputational risks?
At a broader level, the question remains: does the revocation mark a serious strategic setback for India, reducing its footprint in West and Central Asia, or could it push New Delhi to explore innovative multilateral frameworks with partners like Russia and Central Asian republics?
The answers are far from clear. What is certain, however, is that Indian businesses will need to navigate an uncertain landscape of rising costs, diplomatic negotiations, and competitive threats. Much now depends on how swiftly New Delhi can engage Washington and Tehran to carve out a new arrangement—or risk losing ground in a region where China is rapidly expanding its influence.
What do you think is the best way forward for India? Share your views in the comments below.