India Secures 6-Month US Sanctions Exemption for Strategic Chabahar Port in Iran

India has received confirmation that US sanctions on Iran's Chabahar Port will not apply to its operations, with the exemption retroactively effective from October 29, according to the Ministry of External Affairs (MEA).

The Indian government had previously entered into a 10-year agreement with Iran last year, wherein the state-owned India Ports Global Ltd (IPGL) committed to investing $370 million in the development of Chabahar Port.

Chabahar holds significant strategic importance for India, serving as a crucial gateway to the Indian Ocean and playing a vital role in delivering humanitarian assistance to Afghanistan.

This announcement comes at a time when India and the United States are engaged in intensive negotiations to finalize a major trade agreement. MEA spokesperson Randhir Jaiswal stated, "We continue to remain engaged with the US side on finalising the trade deal. Both sides are continuing to hold discussions. For any further update, I would refer you to the Ministry of Commerce."

This isn't the first time Chabahar has received such an exemption. In 2018, the first Trump administration granted a similar exception allowing Indian companies to continue developing the port, even as the US imposed comprehensive unilateral sanctions against Iran, whose main port at Bandar Abbas was operating beyond capacity.

The current US exemption for Chabahar Port was issued as part of broader UN sanctions recently implemented against Iran regarding its nuclear program.

The MEA also addressed the matter of US sanctions on Russian oil companies, stating, "We are studying the implications of the recent US sanctions on Russian oil companies. Our decisions naturally take into account the evolving dynamics of the global market."

Regarding India's energy sourcing strategy, the spokesperson emphasized, "Our position on the larger question of energy sourcing is well-known. In this endeavour, we are guided by the imperative to secure affordable energy from diverse sources to meet the energy security needs of our 1.4 billion people."

External Affairs Minister S Jaishankar's response to Western criticism of India's oil purchases from Russia in April 2022 remains noteworthy. He had pointed out that India's monthly oil imports from Russia were likely less than what Europe purchased in a single afternoon.

Located in Iran's Sistan-Balochistan province along the southern coast, Chabahar Port's Shahid Beheshti terminal is currently operated by India. The port is also highly valued by neighboring Afghanistan as it provides the landlocked country direct access to the Arabian Sea, bypassing Pakistan.

Commerce and Industry Minister Piyush Goyal recently indicated that India and the US are "very near" to finalizing their bilateral trade deal. However, he emphasized that India would not rush into any agreement or negotiate "with a gun to our head."

On Thursday, Goyal reported progress in the India-US trade discussions, expressing optimism that both nations would work toward achieving a fair and equitable agreement in the near future.