Any country having business dealings with Iran runs the “potential risk of sanctions”, the US has warned, noting that it is aware that Tehran and New Delhi have signed a deal concerning the Chabahar port.

India on Monday signed a 10-year contract to operate the strategic Iranian port of Chabahar that will help New Delhi expand trade with Central Asia.

Located in the Sistan-Balochistan province on the energy-rich Iran’s southern coast, the Chabahar port on the Gulf of Oman — which New Delhi had proposed to develop way back in 2003 — will provide Indian goods a gateway to reach landlocked Afghanistan and Central Asia using a road and rail project called International North-South Transport Corridor (INSTC), bypassing Pakistan.

US sanctions on Iran over its suspected nuclear programme had slowed the development of the port.

“We’re aware of these reports that Iran and India have signed a deal concerning the Chabahar port. I will let the government of India speak to its own foreign policy goals vis-a-vis the Chabahar port as well as its bilateral relationship with Iran,” state department deputy spokesperson Vedant Patel told reporters at his daily news conference on Monday.

“I will just say, as it relates to the United States, US sanctions on Iran remain in place and we’ll continue to enforce them,” Patel said in response to a question on the Chabahar port deal.

“You’ve heard us say this in several instances, that 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,” Patel said.

India and Iran have projected the port as a key hub for the 7,200-km-long INSTC — a multi-mode transport project for moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.

The long-term agreement was signed by Indian Ports Global Limited (IPGL) and the Port and Maritime Organisation of Iran, an official statement said.

IPGL will invest about $120 million while another $250 million will be raised as debt.

The agreement replaces an initial 2016 pact, which covered India’s operations at the Shahid Beheshti terminal in Chabahar port and had been renewed on an annual basis.

Chabahar port was last year used by India to send 20,000 tonnes of wheat aid to Afghanistan. In 2021, the same was used to supply environmentally friendly pesticides to Iran.

Kandla port in Gujarat is the closest to Chabahar at 885 nautical km while the distance between Chabahar and Mumbai is 1265 nautical km.

Arbitration tribunal

India and Iran have agreed that matters requiring arbitration with regard to the operations of the Chabahar port will be referred to an arbitration tribunal based in Muscat, a senior Indian government official said on Tuesday.

India on Monday signed a 10-year contract to operate the strategic Iranian port of Chabahar that will help it expand trade with Central Asia.