US president Donald Trump’s recent move to revoke a sanctions waiver for Iran’s Chabahar Port has cast a shroud of uncertainty over the future of the International North South Transport Corridor (INSTC).
India has been a vocal proponent of the INSTC, a Central Asia-centric multimodal transport channel for regional trade development, which depended on the country’s strategic investment at the only deepsea port in Iran, located beyond the Strait of Hormuz.
India, through a special purpose vehicle, Indian Ports Global (IPG), holds 10-year concession rights at Chabahar for the operation of some cargo berths, including for containers, in return for a $120m investment in the port’s modernisation and extending a $250m credit line for other infrastructure upgrades in and around the harbour.
According to reports, Mr Trump last week signed an executive order seeking to reimpose “maximum economic pressure on Iran”, Tehran’s nuclear programme being at the heart of US concerns.
“The treasury secretary will also issue guidance for all relevant business sectors – including shipping, insurance, and port operators – about the risks to any person that knowingly violates US sanctions with respect to Iran or an Iranian terror proxy,” the order said.
“The secretary of state will also modify or rescind existing sanctions waivers and cooperate with the secretary of treasury to implement a campaign aimed at driving Iran’s oil exports to zero,” it added.
The 2018 sanctions waiver for Chabahar was meant to help landlocked Afghanistan, and following IPG’s takeover of berth operations in December 2018, Chabahar is said to have handled some 450 vessels, 135,000 teu, and 8.7m tons of other cargo.
That steady growth followed new ocean service additions, including from Islamic Republic of Iran Shipping Lines (IRISL), between Chabahar and West India (Nhava Sheva/Mundra).
Additionally, India and Russia had been pushing for the expansion of the INSTC to keep bilateral supply chains running in the wake of western sanctions on Russia over the Ukraine conflict. Trade volumes between the two saw a five-fold increase over the past five years, hitting $66bn in 2024, according to available data.
To that end, RZD Logistics, a subsidiary of the Russian railway monopoly began container train services from Moscow to Iran for transloading solutions, while Fesco, Russias largest container carrier, expanded capacity on services to Nhava Sheva and Mundra, with feeder relays for other Indian ports, including Kolkata, Tuticorin, and Chennai.
India’s interest in Chabahar was regarded as a counter to China’s expansionist policies in the region, but local trade and other industry experts now believe geopolitical developments could derail that, or at least keep them in limbo.
Indian prime minister Narendra Modi is scheduled to visit the US this week, and there are tentative indications that Chabahar will be up for discussion during bilateral meetings.
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