Manish Tewari | Will India Pause Or Retreat On Chabahar?

For decades, the Chabahar project promised to be India’s most tangible axis of influence into West Asia and Central Asia — a civilian gateway that could bypass Pakistan, link New Delhi to landlocked Afghanistan and anchor a wider “Necklace of Diamonds” strategy to balance China’s maritime reach. But what began as a pragmatic partnership between India and Iran, often described as an “all-weather” relationship shaped by civilisational ties and strategic convergence, is now under acute pressure. Today, Chabahar stands at a crossroads, where geopolitics, sanctions, and strategic compulsions intersect.

From Strategic Vision to Uncertain Future: Back in the early 2000s, India began looking for ways around Pakistan to reach Afghanistan and beyond. A key opening came through Iran’s position on the Gulf of Oman. That region quickly drew attention as a viable path forward. Over time, India and Iran developed a cooperative framework for the development of the Shahid Beheshti terminal at Chabahar Port.

A shift began in 2016, when India entered into an agreement with Iran and Afghanistan — aimed at building the port along with linked transportation routes. Money flowed heavily from India, covering close to 120 million dollars just for upgrading the port, while also offering more lending tools for cross-border infrastructure work. Instead of outside firms, Indian entities like India Ports Global Limited took charge of running the terminal.

For India, it wasn’t just another building project — it carried deeper geostrategic weight. Still, the move signalled boldness in partnering with Iran while others applied pressure. Yet those ambitions hover today through thick fog of doubt. Now that US Sanctions have returned stronger, India faces tougher choices about trading with Iran, where risks now bump against delicate politics.

India’s Gateway to Central Asia: What makes Chabahar stand out is where it sits on the map. Located outside the Strait of Hormuz, the port offers India direct maritime access to Afghanistan and Central Asia, bypassing Pakistan entirely. This is especially important for India considering it has encountered geopolitical obstacles in attempting to access these areas.

India can use Chabahar to trade with Afghanistan and assist in the reconstruction of Afghanistan (as well as other nearby countries). Through this port, India will have access to areas that are very rich in natural resources in the flow of trade via land routes through Central Asian countries. At the same time, it fits well with the goal of the International North-South Transport Corridor (INSTC) — connecting India not just to Europe but also to Russia, using Iran as part of the route.

Beyond economics, Chabahar is also important to India from a strategic perspective. China has been increasing its influence by building ports and infrastructure along what they call the Belt and Road Initiative (BRI) and “String of Pearls” — including ports along a route from the South China Sea through India and into the Arabian Sea. India’s response to these developments is to build their own “Necklace of Diamonds” which would provide India with strategic partners and “reach” to all areas in the Indian Ocean from Oman to parts of Southeast Asia.

From this perspective, Chabahar plays a key role in projecting India’s presence in the western Indian Ocean, while also attempting to limit China’s reach through Gwadar in Pakistan. At the same time, the port helped show that India can effectively operate across regions.

Sanctions, Strategy and the Budget Signal: The biggest challenge to Chabahar today comes from the United States’ sanctions regime on Iran. While India had previously secured limited exemptions to continue work on the port, given its role in tacitly supporting the Taliban regime in Afghanistan.

However, the current geopolitical climate has narrowed those options.

Reports indicate that a waiver for the Chabahar project could be valid only until April 26, 2026, making India’s time frame limited. Indian companies would have to reduce their involvement or face pressures from potential secondary sanctions impacting their companies and financial institutions.

The 2026-27 Union Budget appears to represent this tension; no allocation for Chabahar sends a strong signal of diffidence and timidity, a ceding of space in a critical region that has implications on India’s strategic autonomy. Withdrawing from the Chabahar project or loosening its commitment undermines both India’s long-term regional strategy and its reputation as a trustworthy partner.

A Strategic Setback or Tactical Pause? A slower pace or pullout from Chabahar carries serious consequences. Right off, India’s grip on Iranian and nearby strategic spaces grows weaker. With Tehran struggling under financial stress, chances rise that it will lean more heavily on Beijing and Moscow — where money and backing tend to flow easier — making New Delhi’s role less dominant.

This development is particularly concerning when seen alongside recent reports of India’s withdrawal from the Ayni air base in Tajikistan. Together, these signal a gradual erosion of India’s strategic footprint in Central Asia, with key assets and positions slipping away at a time of intensifying geopolitical competition.

What happens next ties back to India’s plans for global reach. When Chabahar stays shut, routes linking India to Afghanistan and Central Asia become more complex and less efficient. Trade slips under pressure while New Delhi’s role in shaping nearby events weakens too.

This also creates space for China and Pakistan to build up their narrative and infrastructure networks. Gwadar, shaped by the China-Pakistan Economic Corridor (CPEC), might see increased trade activity along with long-term positioning, should Chabahar lose steam.

India faces the challenge of juggling its long-term ambitions with the short-term pressures it faces when thinking about developing the Chabahar port and the INSTC. In addition, India needs to demonstrate to its partner countries that it remains committed to regional partnerships through this transition, despite the pressures.

Chabahar has always been about much more than just building an infrastructure project; it was about Indian intent to shape and influence its immediate neighborhood, expanding India’s economic reach and providing India with room to assert its own strategic autonomy in the world. If current pressures result in a dilution of that larger vision, the ramifications will be felt beyond a single project.

India cannot afford to lose any of its key strategic assets, as the geopolitical landscape is highly contested. Chabahar port is an example of India’s retreat from a critical arena of geopolitics.