Chabahar Port Emerges as a Strategic Lifeline in India-Iran Trade

Recent exchange of missiles and rockets between Iran and Israel has further destabilised the Middle East, after the US bombing on Iran's nuclear facilities that pushed Iran to call for the closure of the Strait of Hormuz. While a ceasefire has been declared, uncertainty still hangs over the region. Amid all this geopolitical turbulence, the strategic significance of the Chabahar port emerges sharply into focus. 

From Bandar Abbas to Chabahar

Iran's declaration of closure of the Strait of Hormuz terrified businesses globally. Bandar Abbas is Iran's largest commercial port, located on the mouth of the Strait of Hormuz, and is of significant strategic and economic value not just for Iran but also for regional players like India. The port has long served India as a key transit point for exporting goods, particularly bypassing Pakistan to landlocked countries like Afghanistan and Central Asia.

The recent tension in West Asia has prompted India to fast-track its plan to develop rail and road infrastructure at Chabahar port. This would position Chabahar as the preferred port of call for Indian goods destined for Central Asian countries and Afghanistan, significantly reducing dependence on Bandar Abbas. 

As of now, Indian shipments to Iran and Central Asian countries mainly use Bandar Abbas port. India’s focus on infrastructure projects in Iran gains added significance amid worsening India–Pakistan relations, especially after the April terrorist attack on tourists in Pahalgam.

As part of the plan, India and Iran will fast-track the development of a new railway line connecting Chabahar Port to Zahedan city. This rail link could transform Chabahar into a key gateway for the International North–South Transport Corridor (INSTC), serving as a primary trade route for Central Asian and Eurasian nations. The project is expected to be completed by late 2026 or early 2027.

As per the Ministry of Ports, Chabahar is a destination of 80,000 twenty-foot equivalent units and 3 million tonnes of bulk cargo shipping through waterways in the Financial year 2025.

India-Iran Trade Relations

Despite being curtailed by sanctions, trade with Iran remains strategically important for India. In 2023, India was the third-largest importer of Iranian goods, while its exports to Iran—primarily basmati rice accounting for $753.2 million, bananas of $53.2 million, soya meal of $70.6 million, Bengal gram of $27.9 million, and tea of $25.5 million—totalled $1.24 billion in FY 2025. Although imports from Iran have sharply declined since 2019 due to U.S. sanctions, the country continues to be a vital partner, particularly for agricultural exports and as a key transit hub via the Chabahar Port.

India’s tea exports to Iran saw a remarkable five-fold increase last year, rising to 31 million kilograms, up from just 5.9 million kilograms in 2023, when U.S. sanctions had caused a significant decline. In comparison, 22 million kilograms were exported in 2022. According to officials, Iran now accounts for around 20% of India’s total tea exports, highlighting its continued importance as a key market.

Iran imports from India nearly one million tonnes of Basmati rice, accounting for 20% of India's Basmati export. While direct sugar exports to Iran remain limited, India has been routing shipments to Afghanistan via Iran’s Bandar Abbas Port, given its strained relations with Pakistan that block overland access.

Also Read: SMEStreet Global Gateways Report featuring: India -Iran Trade

The Road Ahead

As the world heads towards a multipolar globe, geopolitical fluctuations ripple across West Asia. India's strategic readjustment towards Chabahar Port marks a pivotal shift in its regional trade and connectivity agenda. The volatility surrounding the Strait of Hormuz and instability at Bandar Abbas have underlined the urgency for resilient and diversified trade routes. With Chabahar emerging as a crucial node in India’s outreach to Afghanistan, Central Asia, and Eurasia, infrastructure development—particularly the Chabahar–Zahedan railway—stands to unlock long-term logistical and economic advantages.

Simultaneously, Iran remains a vital, if complex, trade partner for India. Despite sanctions, bilateral trade—driven largely by agricultural exports from Indian MSMEs—has not only persisted but rebounded in key sectors such as tea and Basmati rice. The synergy between strategic infrastructure and sustained commodity trade reinforces the importance of India–Iran cooperation in shaping an alternate corridor of commerce in an increasingly uncertain global order.

In this evolving equation, Chabahar Port is no longer just a plan—it is becoming a policy imperative.