No Allocation for Chabahar Port in Budget 2026–27

India weighs strategic options as US sanctions waiver nears expiry

February 1, 2026: India has made no fresh budgetary allocation for the Chabahar port project in the Union Budget 2026–27, a departure from recent years when around ₹100 crore was routinely earmarked for the strategic initiative in Iran. The port, located in Iran’s Sistan-Balochistan province, has been central to India’s regional connectivity plans, particularly for access to Afghanistan and Central Asia. The absence of funding comes at a time when the United States has reimposed stringent sanctions on Iran, while granting India a conditional six-month waiver for Chabahar that is set to expire on April 26.

Developed jointly by India and Iran, Chabahar is a key component of the International North-South Transport Corridor (INSTC), a 7,200-kilometre multimodal trade route linking India with Iran, Afghanistan, Central Asia, Russia and Europe. External Affairs Ministry spokesperson Randhir Jaiswal recently said New Delhi remains in discussions with Washington on the project’s future, noting that the US Treasury’s guidance on the waiver is valid only until late April. India, he said, continues to engage the US to secure clarity on sanctions-related concerns.

Officials have indicated that India is in the process of transferring nearly USD 120 million, its committed investment in the project, while also exploring the creation of a new entity to reduce direct government exposure and ensure continuity. The issue has gained urgency amid escalating US-Iran tensions, including President Donald Trump’s announcement of a 25 per cent tariff on countries doing business with Iran. Government sources maintain the impact on India will be limited, pointing to bilateral trade of USD 1.6 billion last year, with Indian exports accounting for the bulk of the exchange.