Chabahar out of Union Budget 2026: Is US pressuring India to pull back from Iran’s strategic port? | World News

New Delhi: India did not allocate any funds for Iran’s Chabahar port in this year’s Union Budget. Last year, the government had allocated Rs 400 million for the project. New Delhi started investing in the project in 2017-18, marking the first time that no budgetary allocation has been allocated for the joint venture with Iran.

Analysts suggest that the main reasons behind India’s reluctance are increasing pressure from the US and changing geopolitical conditions. Global developments have weakened Iran in the last two years, and experts also see this as a factor in India’s failure to maintain its financing.

US sanctions, regional instability and geopolitical uncertainty have previously slowed progress at the port, and the lack of budget allocation now raises concerns that operations could stall.

The port has two terminals: Shahid Kalantari and Shahid Bahishti. It is located outside the Strait of Hormuz, which allows large ships to dock safely. It is just 170 kilometers away from Gwadar port of Pakistan. The port, located in Iran’s southeastern Sistan-Baluchistan province, has long been seen by India as a strategic alternative route. It plays an important role in the International North-South Transport Corridor, which provides easier access from India to Europe and also benefits Iran and Russia.

In May 2016, Prime Minister Narendra Modi visited Tehran, the first such visit by an Indian leader in 15 years. During this visit, he committed $55 million to develop and operate the Chabahar port as part of the trilateral relationship with Iran and Afghanistan.

Chabahar enables India to bypass Pakistan and reach the markets of Afghanistan and Central Asia. The port also serves as a balance to the China-Pakistan Economic Corridor and Gwadar port.

In May 2024, India signed a 10-year agreement with Afghanistan to operate the Shahid Bahishti terminal to maintain trade, humanitarian aid and regional relations. Under the 2016 agreement, New Delhi also resumed operations at the terminal on an annual basis.

The US exempted Chabahar from sanctions in 2018 but later reimposed them under the Trump administration. Last September, Washington announced sanctions against entities operating the port but granted India a six-month exemption that will expire soon.

Analysts think that the main reason for India not allocating funds in this year’s budget is US sanctions. New Delhi’s main concern is to avoid conflict with the United States while protecting its own strategic interests.

Experts say New Delhi values ​​its relationship with Washington and does not want to risk angering a global power. Had the exemption remained in place, India would likely have continued its investment in the project.

While some media reports suggest that India has backed down, official statements make clear that New Delhi maintains relations with both Tehran and Washington to continue operations. The State Department confirmed ongoing coordination with the United States and reiterated long-standing ties with Iran, stating that the partnership will go even further.

India has invested billions in Chabahar over the years. It has completed most of its investments under the ten-year agreement in 2016 and demonstrated its continued commitment by extending the ten-year operational agreement in 2024.

Analysts think that the country will seek a diplomatic solution with the United States rather than abandoning the port. Chabahar’s strategic importance, especially in terms of access to Afghanistan and Central Asia, ensures India’s continued existence. Their investments strengthen interest and long-term interest in the port.