Trump’s tariff threat: Will India pull out of Chabahar port project in Iran?

With relations between the US and Iran under tremendous strain and President Donald Trump threatening new tariffs on countries that trade with Tehran, India is treading carefully on its involvement in developing Iran's strategic Chabahar port.

Located on Iran's southern coast in the Sistan-Balochistan province, the Chabahar port is a key project for India. While the US imposed strict economic sanctions on Iran last year, it granted India a temporary exemption for this project, which is set to expire on April 26.

Amid reports that India might withdraw from the project due to the threat of new tariffs, Ministry of External Affairs spokesperson Randhir Jaiswal, on Friday, confirmed that India is in discussion with the US about the exemption.

"We remain engaged with the US side in working out this arrangement," Jaiswal said, referring to the conditional sanctions waiver. He also highlighted India's long-standing relationship with Iran and said that New Delhi is monitoring the situation in the country, which has seen recent anti-government protests.

Chabahar port: What are India’s options now?

India and Iran are developing the Chabahar port to improve trade routes and economic ties, and aim to make it a crucial part of the International North-South Transport Corridor (INSTC) – a massive 7,200-km network of ships, rail, and roads designed to move goods between India, Iran, Afghanistan, Russia, Central Asia, and Europe.

Sources, however, suggest India may be looking for ways to limit its direct involvement. One option being considered is transferring the committed funds, around $120 million, to complete its financial obligation.

Another idea is to create a new, separate organisation to oversee the port's development. This would allow India to continue supporting the project without direct government exposure.

Tensions between the US and Iran have been high, with the Trump administration previously announcing a 25 per cent tariff on countries doing business with Iran. However, government sources believe this new tariff would have a "minimal impact" on India. Jaiswal shared that India-Iran trade was $1.6 billion last year, with Indian exports at $1.2 billion and imports at $0.4 billion.

Advisories for Indian citizens in Iran

Regarding the safety of Indian citizens, Jaiswal assured that the Indian embassy in Tehran is in contact with them. He added that about 9,000 Indian citizens, mostly students, are currently in Iran.

In response to the deteriorating security situation, India has issued several travel advisories. The government has advised Indian citizens currently in India to avoid all travel to Iran. For those already in Iran, the advice is to leave the country using any available commercial flights or other means.

These precautions come as regional tensions rise, partly due to the US response to Iran's handling of internal protests. The protests, which started over economic issues, have spread across the country and now include calls for political reform.