No Funds For Chabahar Port Project In Union Budget Amid US-Iran Tensions

India has made no allocation for the Chabahar port project in the 2026 Union Budget, a decision that comes amid escalating tensions between Washington and Tehran and uncertainty over US sanctions on Iran.

For several years, New Delhi had earmarked an annual outlay of Rs 100 crore for the development of Chabahar, a flagship connectivity project located in Iran's Sistan-Balochistan province along its southern coast. India is a major partner in the development of the port, which has long been seen as a key part of its regional trade and strategic outreach to Afghanistan, Central Asia and beyond.

Chabahar sits at the mouth of the Gulf of Oman and is Iran's first deepwater port, giving the country direct access to global maritime trade routes. The port lies to the west of Iran's border with Pakistan, roughly mirroring the position of Gwadar port to the east of the border in Pakistan. Gwadar has been developed by China as part of the Belt and Road Initiative (BRI), making Chabahar not only an economic project but also India's counterweight in the region.

For Iran, Chabahar has been projected as a means to mitigate the impact of Western sanctions by opening alternative trade routes. For India, the port offers a crucial route that bypasses Pakistan, which has consistently denied India overland access for trade with Afghanistan and Central Asia.

India's Role In Chabahar Project

India's involvement in Chabahar dates back more than two decades. Discussions on the port began in 2002, when Hassan Rouhani -- then Iran's National Security Advisor under President Syed Mohammad Khatami -- held talks with his Indian counterpart, Brajesh Mishra. The following year, during President Khatami's visit to India, he and then Prime Minister Atal Bihari Vajpayee signed a roadmap for cooperation, identifying Chabahar as one of its key projects.

Following the partition, India's land links with Iran and Central Asia were severed as Pakistan emerged as a hostile neighbour. For much of the next four decades, this had limited impact because India's economy remained largely closed.

India and Iran's cooperation deepened after the Taliban seized power in Afghanistan in 1996. Both countries opposed the Pakistan-backed Sunni Islamist militia and supported the Northern Alliance led by Ahmed Shah Massoud. As New Delhi sought to overcome Pakistan's blockade of land access to Afghanistan, the search for alternative routes became increasingly urgent.

Importance Of Chabahar Port

The importance of Chabahar increased further when China began developing Gwadar port in Pakistan under the BRI. Seen from New Delhi, Chabahar offered not only economic connectivity but also a way to balance China's influence in the region.

In September last year, the United States imposed sweeping economic sanctions on Iran but granted India a six-month exemption for its involvement in the Chabahar port project. That waiver is set to expire on April 26.

Last month, External Affairs Ministry spokesperson Randhir Jaiswal said India was engaged with the US on issues related to Chabahar. His comments came amid reports that New Delhi was reviewing its options after the Trump administration threatened a 25 per cent additional tariff on countries doing business with Tehran.

"As you are aware, on October 28, the US Department of Treasury had issued a letter outlining the guidance on the conditional sanctions waiver valid till April 26, 2026," Jaiswal said. "We remain engaged with the US side in working out this arrangement."

The Trump administration had earlier announced its decision to revoke the 2018 sanctions waiver for Chabahar, before later extending a six-month exemption to India. As tensions between Washington and Tehran escalated again, President Donald Trump announced a fresh 25 per cent tariff on countries trading with Iran.