Business Standard (BS) reported citing people aware of the matter that the government has drawn up a proposal under which India Ports Global Ltd (IPGL) will divest its holding in India Ports Global Chabahar Free Zone (IPGCFZ) to an Iranian entity.
The move is aimed at insulating Indian operations from potential US sanctions once the current exemption lapses.
India is also exploring an interim arrangement wherein a domestic Iranian operator would manage the port during the sanctions period, with a provision to return operational control to India once restrictions ease, the report said.
However, there is no official statement on the development as of yet.
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India’s engagement at Chabahar has been protected under US sanctions waivers since November 2018. However, the US administration in February 2025 directed a review of such waivers, particularly those offering economic relief to Iran.
The earlier exemption granted in 2018 was revoked on September 29 last year.
“Following India’s representation, the US Department of the Treasury on October 28, 2025, issued a Letter stating that activities at the Chabahar Port will not be exposed to US sanctions till April 26, 2026,” the Ministry of External Affairs (MEA) had reportedly told the Parliament.
India has invested nearly $120 million in port equipment and development, as per BS.
Strategic importance remains intact
Chabahar remains central to India’s regional connectivity ambitions. It provides a route to Afghanistan and Central Asia while bypassing Pakistan, and is a crucial node in the International North-South Transport Corridor (INSTC), which aims to link India with Central Asia and Russia through a multimodal network.
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Despite the proposed divestment, India is not expected to withdraw entirely from the project. New Delhi is attempting to preserve its long-term strategic interests while reducing immediate legal and financial risks.
The port has also played a key role in facilitating humanitarian assistance to Afghanistan.
Balancing geopolitics and trade
The move is less an exit and more a recalibration of India’s approach. By transferring its stake to an Iranian entity, India can continue to support the port’s operations indirectly while avoiding the risk of sanctions exposure, as per News18.
India’s decision reportedly reflects a broader effort to balance its ties with Iran against its strategic relationship with the United States.
Legal experts have warned that continued direct involvement without sanctions protection could expose Indian firms to penalties and undermine the country’s ambitions to expand its global port footprint, as per BS.
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