Does India risk US sanctions over Iran’s Chabahar Port deal?

The port deal could help India strengthen trade ties with Central Asia. But a US sanctions threat clouds the pact.

India has signed a 10-year agreement to develop and operate Iran’s strategic Chabahar Port as New Delhi aims to boost trade ties with landlocked Afghanistan and Central Asian countries, bypassing ports in its western neighbour and arch foe Pakistan.

“It [the port] serves as a vital trade artery connecting India with Afghanistan and Central Asian Countries,” India’s Shipping Minister Sarbananda Sonowal said, as New Delhi attempts to strengthen ties with an important Middle Eastern nation.

But the deal has prompted a thinly veiled threat of sanctions from the United States, with whom India has developed close economic and military ties in recent decades.

“Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions,” US State Department spokesman Vedant Patel told reporters.

Indian authorities, however, have downplayed the tensions, with Foreign Minister Subrahmanyam Jaishankar telling reporters on Wednesday that New Delhi would “communicate the benefits” of the deal to the US and urge countries not to “take a narrow view of it”.

Here’s why the port deal matters, what the sanctions threat is all about, and what we should expect:

India Port Global Limited (IPGL) and the Ports and Maritime Organization (PMO) of Iran signed the long-term deal, which will allow New Delhi to upgrade and operate one terminal at Chabahar port over 10 years.

Located in southeastern Sistan-Baluchestan province and perched on the Gulf of Oman, Chabahar Port consists of two separate ports – Shahid Kalantari and Shahid