In the backdrop of US administration’s sanctions on countries trading with Iran, India has allocated no funds to its development work on the Chabahar port in the latest Union Budget for the next financial year, announced by Finance Minister Nirmala Sitharaman on February 1.
In the last few years, India had been making an annual outlay of ₹100 crore to the mega connectivity project in the Sistan-Balochistan province in Iran’s southern coast that was being developed by both India and Iran to boost connectivity and trade ties.
Both countries also strongly pitched for making Chabahar port an integral part of the International North-South Transport Corridor (INSTC) – a 7,200-km-long multi-mode transport project for moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.
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However, in September last year, the US imposed crippling economic sanctions on Iran after military tensions escalated between the two following Israel’s attack on Tehran, but granted India a six-month exemption from the punitive measures on the Chabahar port project. The waiver will come to an end on April 26 this year.
Last month, External Affairs Ministry spokesperson, Randhir Jaiswal, said New India is engaged with the US on the issue related to the Chabahar port project. It is learnt that India was mulling various options relating to the project after Trump administration threatened a 25 per cent additional tariff on countries doing business with Tehran.
As part of a 2024 agreement, India committed to a 10-year, $120 million investment for equipping the port and a $250 million credit line for infrastructure. Reports indicated that by early January, India had completed its $120 million investment.
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