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New Delhi, February 1, 2026 : In a significant policy shift, the Union Budget for 2026–27 has made no provision for fresh development funds for the Chabahar port project in Iran, breaking with the practise of recent years when annual allocations were routinely made for the strategic initiative. This marks the first time that the budget has excluded funding for India’s involvement in the port and its associated infrastructure, reflecting mounting geopolitical uncertainties and intensifying pressure from the United States.
For years, India has contributed around one hundred crore rupees each year to support the port’s development and strengthen regional connectivity, with the project seen as a cornerstone of access to Afghanistan and Central Asia that bypasses Pakistan. In preparation for tighter international financial restrictions, New Delhi finalised its full investment commitment of 120 million dollars and transferred the last tranche in August 2025, effectively settling its financial exposure before sanctions constrained cross-border transfers.
The absence of a fresh budget allocation comes as the waiver that has allowed India to continue operations and engagement at Chabahar under international sanctions is set to lapse on April 26, 2026. The United States, under its renewed sanctions regime, has signalled tough measures for countries maintaining business ties with Tehran. Washington has warned that nations engaged in trade with Iran could be hit with an additional 25 percent tariff on their business with the United States, a move that threatens to complicate India’s broader trade interests given its substantial commercial ties with the American market.
Despite these pressures, New Delhi has emphasised that exiting the Chabahar project is not being considered. Government officials have stressed India’s strategic interest in the port and its role in regional connectivity, and diplomatic channels remain active as talks continue with the United States to explore ways to navigate the sanctions landscape and maintain engagement at the port beyond the current waiver period.
The coming months are likely to be pivotal for the future of this long-term strategic collaboration. With the sanctions waiver expiry looming and external economic penalties threatening to reshape trade relationships, policymakers will face a complex balancing act between safeguarding national interests in regional infrastructure and managing broader international economic and diplomatic imperatives.
