Union Finance Minister Nirmala Sitaraman on Sunday presented the Union Budget for the Financial Year 2026-27. The government has made no allocations for the Chabahar port project, according to the Budget papers released.
The move comes amid escalating tensions between US and Iran in the Middle East.
The Union Budget for 2025-26 earmarked ₹100 crore for advancing Iran’s strategic Chabahar Port project, a key initiative to bolster India’s trade connectivity via the International North-South Transport Corridor (INSTC). This allocation was subsequently enhanced to ₹400 crore amid evolving geopolitical priorities.
Chabahar Port, on Iran’s southeastern coast in the Gulf of Oman, anchors New Delhi’s regional connectivity push. In 2024, India signed a 10-year deal with Iran to manage the Shahid Beheshti terminal, pledging $120 million for equipment and a $250 million credit line for nearby infrastructure. India fulfilled its $120 million commitment by August 2025’s final tranche, leaving no outstanding financial obligations.
Chabahar Port holds immense strategic value for India as a gateway bypassing Pakistan to access Central Asia, Afghanistan, and Europe via INSTC. t counters China’s Gwadar Port and Belt and Road Initiative while enhancing India’s Indian Ocean presence and trade resilience.
The Chabahar project navigates significant geopolitical friction, primarily from US sanctions targeting Iran. In 2025, Washington reimposed stringent restrictions but extended a conditional waiver to India, greenlighting port activities until April 2026.
Recently, Washington has also escalated “maximum pressure” sanctions on Iran’s oil sector in 2026, targeting entities aiding exports and threatening secondary tariffs on importing countries.
