India moves to transfer Iran’s Chabahar Port stake amid looming US sanctions risk

NEW DELHI : India is preparing to divest its stake in the Chabahar Port project to an Iranian entity just days before the expiry of an extended US sanctions waiver covering its operations there, a Business Standard report said on Friday. A proposal has been worked out for India Ports Global Ltd (IPGL) to sell its holding in India Ports Global Chabahar Free Zone (IPGCFZ) to a local Iranian entity, an official aware of the development told Business Standard.

India’s activities at the strategic Iranian port remain exempt from US sanctions until Sunday. Business Standard said New Delhi has been exploring an interim arrangement under which a domestic Iranian entity would manage operations while sanctions remain in place, with assurances that control would revert to India once restrictions are lifted.

Queries sent by Business Standard to the Ministries of External Affairs and Ports, Shipping and Waterways had not received a response at the time of publication.

Amid the ongoing conflict in West Asia, the Ministry of External Affairs has been engaging with stakeholders on the evolving situation. India first secured an exemption for Chabahar-related operations from US sanctions on Iran in November 2018.

Business Standard noted that in February 2025, the US administration directed the Secretary of State to revise or revoke sanctions waivers that offer Iran any form of economic or financial relief, including those tied to the Chabahar Port project. The US State Department later withdrew the 2018 waiver on September 29 last year.

“Following India’s representation, the US Department of the Treasury on 28th October, 2025, issued a Letter stating that activities at the Chabahar Port will not be exposed to U.S. sanctions till 26 April 2026,” the external affairs ministry told Parliament, as quoted by Business Standard.

India has invested close to $120 million in equipment procurement for the Chabahar project. The port has also played a key role in enabling humanitarian aid and emergency assistance to Afghanistan, the ministry said, as cited by Business Standard.

In 2024, India signed a 10-year agreement with Iran to operate a terminal at Chabahar after prolonged negotiations.

Business Standard said India views its presence at the port as strategically significant due to its proximity to Pakistan and China-backed investments at Pakistan’s Gwadar Port.

Chabahar is also considered a crucial gateway for the proposed International North-South Transport Corridor (INSTC), a multimodal trade route linking India with Central Asia and Russia, aimed at cutting transport time between the regions.

Last year, the government assessed potential fallout from continued involvement in Chabahar if sanctions relief was not extended. Legal experts reportedly warned that companies linked to the project could face exposure to sanctions, which may affect India’s ambitions to emerge as a global ports operator, Business Standard said.

IPGL, which runs the India-backed Chabahar terminal, is a wholly owned subsidiary of Sagarmala Development Corporation Ltd (SDCL), now renamed Sagarmala Finance Corporation. The company is India’s first maritime non-banking financial corporation.

Business Standard added that IPGL is also part of the Bharat Global Ports consortium launched by Shipping Minister Sarbananda Sonowal in February 2025 to pursue overseas port opportunities. IPGL also operates Myanmar’s Sittwe Port.

If the stake transfer to a local Iranian entity goes through, the associated sanctions risks could ease significantly, the report added.