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India has made no budgetary allocation for the Chabahar port project in the Union Budget 2026–27, marking a shift from recent years when funds were regularly earmarked for the strategic connectivity initiative in Iran. In previous budgets, New Delhi had allocated around ₹100 crore annually for the development of the port located in Iran’s Sistan-Balochistan province along the southern coast. India remains a key partner in the project, which is seen as critical for regional connectivity and trade. The absence of fresh funding comes amid renewed sanctions imposed by the United States on Iran. In September last year, Washington announced stringent economic measures against Tehran but granted India a conditional six-month waiver for its involvement in the Chabahar port project. That exemption is set to expire on April 26.

Chabahar Funding Amid US Sanctions Talks

The Chabahar port is jointly being developed by India and Iran and is viewed as a vital node in the International North-South Transport Corridor (INSTC), a 7,200-kilometre multimodal network aimed at boosting freight movement between India, Iran, Afghanistan, Central Asia, Russia and Europe. Last month, External Affairs Ministry spokesperson Randhir Jaiswal said India was in discussions with the United States regarding the future of the project. He noted that the US Treasury had issued guidance on a conditional sanctions waiver valid until April 26, 2026, and that India remained engaged with Washington on the matter. Officials familiar with the developments said India is in the process of transferring nearly USD 120 million, its committed investment in the project, to limit direct exposure to the port’s operations.

They added that New Delhi is also exploring the creation of a new entity to carry forward the project, which would reduce the government’s direct involvement while ensuring continued support, PTI reported. The issue has gained prominence amid escalating tensions between Washington and Tehran, including a recent announcement by US President Donald Trump imposing a 25 per cent tariff on countries doing business with Iran. Government sources have said the move is expected to have a minimal impact on India. According to official data, bilateral trade between India and Iran stood at USD 1.6 billion last year, with Indian exports accounting for USD 1.2 billion and imports valued at USD 0.4 billion.