The verdict is already emerging: Two of India’s most ambitious trade bets — the Chabahar Port route through Iran and the India-Middle East-Europe Economic Corridor — are both under pressure from the Iran-US war. But experts say only one of them has a real future. Here is the full breakdown.
India has spent years and billions of dollars building two grand trade corridors to connect itself with Central Asia, the Middle East, and Europe — all while bypassing its hostile neighbour Pakistan.
The first runs north through Iran: the Chabahar Port on Iran’s southeastern coast, feeding into the International North-South Transport Corridor (INSTC) towards Russia, Central Asia, and Afghanistan.
The second runs west through the Gulf: the India-Middle East-Europe Economic Corridor (IMEC), linking Indian ports to the UAE, Saudi Arabia, Jordan, Israel, and onwards to Europe.
Both were ambitious. Both were strategic masterstokes on paper. And now, both are in serious trouble — but for very different reasons.
India has invested nearly $500 million in the Chabahar port project, a strategic gateway giving India access to Afghanistan, Central Asia, Russia, and Europe, while bypassing Pakistan.
Chabahar provides India a direct trade route to Afghanistan and Central Asia while bypassing Pakistan, which has historically denied India land transit access to Afghanistan.
In May 2024, India deepened this bet significantly. India signed a 10-year contract with Iran, under which the state-run India Ports Global Ltd (IPGL) committed investments worth $370 million for the development of the Shahid Beheshti terminal at Chabahar.
The port is also the western anchor of the INSTC — a multi-modal transport corridor that could cut transit times by around 40% and reduce logistics costs by approximately 30% compared to the Suez Canal route.
On paper, Chabahar was India’s answer to China’s Gwadar port in Pakistan — a strategic foothold in a neighbourhood being rapidly reshaped by Beijing’s Belt and Road Initiative.
IMEC — the India-Middle East-Europe Economic Corridor — was announced at the G20 summit in New Delhi in September 2023 and immediately hailed as a potential counterweight to China’s Belt and Road Initiative.
The corridor is a proposed route from India to Europe through the United Arab Emirates, Saudi Arabia, Israel, and Greece, drawing on what is now described as the ancient Golden Road. The project was launched to bolster transportation and communication links between Europe and Asia through rail and shipping networks.
IMEC features three pillars: a transportation pillar integrating rail and maritime networks, an energy pillar with interconnected energy and electricity infrastructure across continents, and a digital pillar providing new fibre-optic cables and cross-border digital infrastructure.
The political backing for IMEC is formidable. US President Donald Trump called it “one of the greatest trade routes in history” during his meeting with Indian Prime Minister Narendra Modi.
And in January 2026, just weeks before the war broke out, the signing of a long-awaited EU-India trade deal gave IMEC extra momentum.
On February 28, 2026, the US and Israel launched Operation Epic Fury on Iran. The consequences for both trade corridors were immediate and severe.
Israeli airstrikes focused on military installations surrounding Chabahar, while the India-funded Shahid Beheshti freight terminal was not directly hit — but the damage to Chabahar’s future may not require a single bomb to land on Indian infrastructure.
The problem is legal, financial, and diplomatic.
India’s sanctions waiver from the United States — which allows India to operate the Chabahar terminal despite broader Iran sanctions — is scheduled to expire on April 26, 2026, leaving a narrow window for India to reassess its strategy as tensions escalate further.
The Trump administration had already threatened severe consequences. Trump’s new 25% tariff on countries trading with Iran complicates India’s engagement, particularly at Chabahar Port, undermining a previous waiver and injecting uncertainty into regional stability and India-US ties.
India reportedly informed the US Treasury’s Office of Foreign Assets Control (OFAC) that it intended to wind down all activities at the port, including at the Shahid Beheshti terminal.
And the railway that would have made Chabahar a true trade powerhouse? The Chabahar-Zahedan railway — a key component of the INSTC — due for completion in 2026 will likely face indefinite delays.
The verdict from one expert is blunt: “If Iran does not lose the war, it will remain under sanctions. If it does lose the war, the sanctions may be lifted but the benefits will be captured by the winners,” said Rafiq Dossani, economist at RAND — arguing that India’s route through Iran is a dead end.
Operations at Chabahar Port are jeopardised, and the ambitious IMEC faces existential viability threats due to the destruction of Arabian Peninsula port infrastructure.
IMEC passes through the UAE, Saudi Arabia, Jordan, and Israel. Iran has struck the UAE and Saudi Arabia in retaliation for allowing US forces to operate from their territory. The corridor’s western anchor — Israel’s Haifa Port — is in a country at war.
The intention behind Israel’s inclusion in the IMEC corridor was to establish a link to European ports, utilising its rail connectivity and the Haifa Port. However, its deepening confrontation with Iran now places its infrastructure and logistics systems at direct threat from missile attacks and cyber strikes.
The viability of rail transit across Jordan to Haifa has become politically and logistically uncertain in the face of growing public opposition and strategic caution from Jordanian leadership. This undermines the European-facing end of IMEC.
On top of this, the Suez Canal — the alternative that IMEC was meant to supplement — is also effectively unusable. Major carriers have suspended or restricted transit via the Red Sea and Suez Canal, leading to an increase in transit times by 10 to 20 days and freight rates 40% to 50% higher on key India-Europe routes.
| Factor | Chabahar / INSTC | IMEC |
|---|---|---|
| Physical damage from war | Strikes near port; railway halted | Gulf ports hit; Israel under attack |
| US sanctions risk | 🔴 Critical — waiver expires April 26 | 🟢 Backed by US and G7 |
| Political future | 🔴 Dead end if Iran under sanctions | 🟡 Delayed but long-term viable |
| Key sponsor | India alone | India, US, UAE, Saudi Arabia, EU |
| China risk | China could fill India’s vacuum | Counter to BRI — strategic priority |
| Trump support | 🔴 Against — tariff threats | 🟢 Called it “greatest trade route in history” |
| Short-term outlook | 🔴 Suspended/wound down | 🟡 Paused — India-UAE segment viable |
| Long-term outlook | ❓ Depends on Iran post-war | 🟢 Stronger case after Iran war ends |
Experts say that only one of India’s two grand connectivity bets has a realistic future: IMEC. “IMEC may gain momentum now that the INSTC has stalled,” said Chietigj Bajpaee, senior research fellow at Chatham House.
“If Israel and the US win, IMEC will likely be Israel’s preference over the revival of Chabahar,” said Dossani. “IMEC presents a more significant opportunity,” added Rick Rossow of CSIS, noting that it “tracks geographically” with the markets India is now signing trade deals with.
The logic is powerful. IMEC is backed by the United States, the European Union, Saudi Arabia, and the UAE — the very coalition that just fought the war against Iran. If that coalition wins, IMEC becomes not just a trade route, but a victory lap — rewiring the region’s economic architecture in the post-Iran order.
Chabahar, by contrast, runs through a country that is either at war, under crushing sanctions, or in post-war political chaos. India’s $500 million investment there may be effectively stranded.
There is one scenario that keeps Indian strategists awake at night: China fills the Chabahar vacuum.
If Chinese firms overtake future development projects in Iran, it could gravely undermine India’s wider geoeconomic ambitions — not only at Chabahar but across the entire INSTC corridor.
China already has a 25-year strategic partnership with Iran and is deeply invested in Iranian infrastructure. If India is forced out of Chabahar by US sanctions pressure, Beijing moves in — turning a critical Indian strategic foothold into a Chinese one overnight.
This is why India cannot simply walk away from Chabahar, even if the current situation makes continued operation nearly impossible. Every day India delays a decision is a day China gets closer to the door.
Option 1: Pivot fully to IMEC, accept Chabahar loss Align with the US-led post-war order, pour resources into IMEC’s India-UAE segment, and accept that $500 million in Chabahar is a sunk cost. Upside: deep US alignment, long-term Europe connectivity. Downside: lose all leverage with Central Asia and hand China a strategic gift in Iran.
Option 2: Keep one foot in Chabahar diplomatically Use the April 26 waiver deadline as leverage to negotiate with Washington. Seek a new, longer-term waiver tied to post-war Iran reconstruction. Maintain a minimum operational presence at Chabahar without full financial commitment. This is the “strategic patience” approach.
Option 3: Push for a phased IMEC with Israel bypass Experts suggest prioritising the India-UAE-Saudi segment as an initial commercial axis, with plans to integrate Israel when geopolitical tensions de-escalate. This removes IMEC’s most vulnerable link (Israel) while preserving the corridor’s core economic value for India.
The Iran-US war has effectively killed the short-term future of the Chabahar-INSTC route. The sanctions window is closing, the railway is stalled, and the country that hosts the port is in the middle of the worst crisis of its modern history.
IMEC, by contrast, has the geopolitical wind at its back — US support, EU trade deal momentum, and a post-war Middle East that could be dramatically reshaped in IMEC’s favour. But it too faces real near-term risk: Gulf port damage, Israel’s security situation, and Jordan’s hesitation.
The honest answer is: neither route is fully operational right now. But only IMEC has a credible path back to full operation. Chabahar’s future depends entirely on what kind of Iran emerges from this war — and that is a question no one can answer yet.
Also Read : How India Should Prepare for the Iran-US War: Fuel, Economy & NRIs in Gulf
Disclaimer: This article is written for informational and educational purposes based on publicly available reports as of March 13, 2026. It does not constitute investment or policy advice.
The most important thing to understand: The Strait of Hormuz is not just an oil…
Why this matters to every Indian: India imports nearly 90% of its crude oil. Over…
The short answer: Oil prices have already surged up to 13%. Analysts warn they could…
In short: On February 28, 2026, the US and Israel launched one of the biggest…
The Tamil political action thriller Jana Nayagan, starring Vijay and directed by H. Vinoth, has…
Have you ever wondered why on 26th January Republic Day is celebrated? Every year on…
This website uses cookies.