Impact of US Sanctions on Iran: How will it affect India?
Former US President Donald Trump has issued an order stating that any exemptions given to Iran from existing US sanctions will be revised or completely revoked. The focus is on blocking all financial channels that benefit Iran, including the exemptions granted for the Chabahar Port project.
India, Iran, and Afghanistan had signed a trilateral agreement in 2016, under which India developed the Shahid Beheshti Terminal at Chabahar Port. During Joe Biden’s presidency, India was given a special waiver for this project. However, Trump’s administration has now ordered its removal.
According to a statement from the White House, the US Treasury Secretary will impose sanctions on businesses related to shipping, insurance, and port operations. The order also warns that anyone found violating US sanctions concerning Iran or its affiliated terrorist organizations will face serious consequences.
Trump’s decision on Chabahar Port is a major setback for India, as this port is seen as a strategic gateway to Central Asia. If sanctions are imposed, India will have no choice but to rely on trade routes through Pakistan, which could benefit Islamabad significantly.
Can India convince Donald Trump?
According to The Hindu, the Indian Ministry of External Affairs has so far declined to comment on Donald Trump’s decision. This announcement comes at a time when the US has also started deporting illegal Indian immigrants. All eyes are now on Prime Minister Narendra Modi’s upcoming visit to the US from February 12 to 14, where he is expected to discuss the Chabahar Port issue with Trump.
Indian officials are currently studying Trump’s order and preparing a report on the type of exemption India might seek and how to negotiate for it.
This is not the first time India has faced difficulties due to Trump’s policies on Iran. During his previous term, Trump withdrew the US from the Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), and imposed strict sanctions on Iran. As a result, India had to stop purchasing Iranian oil. However, Trump had granted India an exemption for its development projects in Afghanistan and the Chabahar Port.
India is likely hoping for a similar exemption this time as well.
India suffered heavy losses last time
During Donald Trump’s previous term, India complied with his decision to stop purchasing oil from Iran, which directly impacted Indian oil companies. Buying oil from Iran was much cheaper for India, and refining Iranian crude oil was also cost-effective. India agreed to stop purchasing Iranian oil in exchange for permission from the Trump administration to develop the Chabahar Port. However, new challenges have now emerged for India. Even during Joe Biden’s four-year tenure, India did not resume oil imports from Iran.
The Chabahar Port is crucial for India as it provides access to Central Asia via Afghanistan and reduces India’s dependence on Pakistan for trade routes. In May 2024, India’s Shipping Minister Sarbananda Sonowal signed a 10-year agreement with Iran to develop the Chabahar terminal, which drew sharp criticism from the US. India had indicated its plans to integrate Chabahar into the International North-South Transport Corridor (INSTC) for trade with Russia and Central Asia. The Biden administration disapproved of this move and reminded India that the sanctions waiver for Chabahar was limited, though it did not take further action.
However, Trump’s new policy has now made things even more difficult for India.
