On February 6, 2025, President Trump issued an executive order instructing the Secretary of State to “modify or rescind sanctions waivers, particularly those that provide Iran any degree of economic or financial relief, including those related to Iran’s Chabahar port project.” This policy shift marks a significant turning point in regional geopolitics, particularly for India, which has invested billions in the Chabahar port as a strategic alternative to bypass Pakistan. The decision raises serious concerns regarding the future of India’s ambitions in Central Asia, Afghanistan’s trade prospects, and the broader strategic realignments in South Asia.
Chabahar port, located in southeastern Iran, has been a linchpin in India’s regional connectivity strategy. Since the early 2000s, India has envisioned Chabahar as a counterweight to Pakistan’s Gwadar port and the China-Pakistan Economic Corridor (CPEC). It was designed to serve as India’s gateway to Afghanistan and Central Asia, allowing New Delhi to bypass Pakistan’s territory entirely. The port’s strategic significance was underscored by its inclusion in the International North-South Transport Corridor (INSTC), which aimed to enhance trade connectivity between India, Iran, Russia, and beyond.
For Afghanistan, Chabahar was promoted as an alternative trade route that would reduce dependence on Pakistan’s ports, particularly Karachi. India, in collaboration with Iran, developed infrastructure projects such as the Chabahar-Zahedan railway and invested in Free Trade Zones to bolster the port’s economic viability. However, the recent US policy shift has thrown these ambitious plans into disarray.
The rescinding of the waiver on Chabahar is a direct consequence of the US’s broader strategy to isolate Iran economically. Washington has long viewed Tehran’s regional ambitions with suspicion, and the Chabahar waiver was seen as an exception to its maximum pressure campaign. The US justified the waiver in the past by emphasizing Chabahar’s role in supporting Afghanistan’s reconstruction and economic growth. However, with the withdrawal of US troops from Afghanistan and shifting regional priorities, Washington no longer sees a compelling reason to maintain the waiver.
For India, this move represents a severe setback. Over the years, New Delhi has poured billions into the Chabahar project, not just for economic gains but as a geopolitical tool to assert influence in Central Asia. India’s ambitions now face a harsh reality check as it risks losing a vital connectivity route due to geopolitical uncertainties. The potential disruption of operations at Chabahar could force Indian businesses to reassess their supply chain strategies and trade routes, with significant economic ramifications.
Afghanistan, too, stands at a crossroads. The landlocked nation had envisioned Chabahar as an alternative trade gateway to diversify its economic partnerships. With the port’s future now uncertain, Afghanistan may have to revert to relying on Pakistan’s ports for trade, an outcome that significantly alters the balance of power in regional trade logistics. Islamabad, long wary of Chabahar’s rise, now finds itself in an advantageous position as the most viable transit hub for Afghan goods.
While India’s investments in Chabahar hang in limbo, Pakistan’s strategic position in regional trade remains unchallenged. Pakistan’s well-developed trade corridors, including CPEC, provide a stable, sanction-free alternative for regional connectivity. Unlike Chabahar, which remains vulnerable to geopolitical volatility, Pakistan’s trade infrastructure enjoys robust backing from China, ensuring long-term sustainability.
Gwadar port, located just 72 kilometers from Chabahar, has been steadily expanding under CPEC. Its deep-sea port capabilities and integration into China’s Belt and Road Initiative (BRI) offer unparalleled advantages. As international businesses seek stable trade routes, Gwadar presents itself as the most reliable option, free from the uncertainty plaguing Chabahar. With the US rescinding the waiver, Pakistan has an opportunity to consolidate its role as the primary trade facilitator for Afghanistan and Central Asia.
India’s push for regional dominance, under the guise of connectivity, now faces a formidable challenge. While New Delhi has championed Chabahar as a game-changer, the project’s dependency on diplomatic goodwill has exposed its vulnerabilities. Billion-dollar investments mean little when built on shaky geopolitical ground. The US decision serves as a stark reminder that political gambits do not always translate into sustainable trade routes.
The uncertainty surrounding Chabahar is a cautionary tale for India’s regional strategy. Unlike China, which secures its investments through binding agreements and military presence, India’s reliance on diplomatic maneuvering has left it susceptible to policy shifts. The rescinding of the waiver underscores the limitations of India’s approach, highlighting the need for a more pragmatic and diversified connectivity strategy.
With Chabahar’s viability in question, India must explore alternative strategies to maintain its connectivity ambitions. Strengthening ties with Russia and Central Asian nations through the INSTC remains an option, albeit with logistical challenges. Simultaneously, India may have to reconsider engaging with Pakistan on trade routes, despite longstanding hostilities. While such a shift may be politically sensitive, economic pragmatism could dictate a more flexible approach in the future. For Afghanistan, the immediate concern is securing stable trade routes. With the Taliban government in place, economic survival takes precedence over geopolitical preferences. If Chabahar becomes unfeasible, Kabul may have no choice but to engage more deeply with Pakistan’s trade infrastructure, potentially strengthening Islamabad’s regional influence.
Following Recommendations
- India should diversify its trade connectivity strategies beyond Chabahar and explore alternative routes such as the INSTC and increased maritime cooperation with Southeast Asian nations.
- Pakistan should capitalize on the instability surrounding Chabahar by further enhancing Gwadar’s trade infrastructure and promoting it as the most stable regional hub.
- Afghanistan should reassess its trade dependencies and engage in diplomatic efforts to secure multiple trade routes to avoid overreliance on any single country.
- The US should clarify its long-term policy on Chabahar to provide businesses and stakeholders with a clear direction regarding its stance on sanctions and trade facilitation.
- China should continue leveraging its influence in South Asia to strengthen CPEC’s regional integration, offering an alternative to projects impacted by US sanctions.
- India must improve its diplomatic engagement with Iran to mitigate the impact of the waiver revocation and explore workarounds that keep Chabahar operational.
- International organizations should facilitate multilateral trade discussions to ensure that geopolitical shifts do not hinder regional economic growth.
- Businesses operating through Chabahar must develop contingency plans to adapt to the evolving sanctions landscape and minimize trade disruptions.
- Regional cooperation forums should be strengthened to address connectivity challenges in a collaborative manner, ensuring economic stability despite political tensions.
- Economic and geopolitical think tanks should conduct impact assessments on the waiver’s consequences and propose policy recommendations for affected countries.
The rescinding of the Chabahar waiver marks a pivotal moment in South Asian geopolitics. India’s grand connectivity ambitions now face an uncertain future, while Pakistan emerges as the most viable regional trade corridor. The decision underscores the fragile nature of geopolitical investments and highlights the importance of stability in trade and connectivity initiatives. As regional dynamics continue to evolve, adaptability and pragmatic policymaking will be crucial for all stakeholders.
“In the business world, the rearview mirror is always clearer than the windshield.” – Warren Buffett
