Uzbekistan Weighs Risks of Chabahar Investment

Executive Summary:

• Uzbekistan’s plans to build infrastructure facilities at the Iranian Chabahar port to gain direct access to the Indian Ocean have not been implemented, indicating Tashkent’s possibly cautious approach to this issue.
• New Delhi is strengthening its economic ties with Russia and the People’s Republic of China (PRC) through ongoing negotiations to create a free trade zone with the Eurasian Economic Union.
• Tashkent is pivoting toward an alternate Trans-Afghan railway corridor linking Uzbekistan, Afghanistan, and Pakistan, aiming for a faster, more direct Eurasia–South Asia route and reduced dependence on Iranian infrastructure.

On September 29, the U.S. State Department’s decision to reimpose sanctions on the Iranian port of Chabahar came into effect (U.S. Department of State, September 16). This move reflects Washington’s current maximum pressure policy to isolate the Iranian regime. Renewed sanctions will hinder the development of Chabahar, affecting the economic interests of Tehran and other countries, such as India and Russia, that participate in trade routes involving the port. India, Iran, and Russia are increasing mutual trade and are keen to establish fast transport links with each other. The International North-South Transport Corridor (INSTC) is one such joint infrastructure project, and currently hinges on the deep-water port of Chabahar (see EDM, April 18, 2022). Additionally, Iranian land transit can reduce the cost and time of transporting goods from India to Central Asia and back compared to sea routes through Europe or the People’s Republic of China (PRC). 

New Delhi is seeking closer economic ties with Russia (see EDM, September 10). Indian negotiations on establishing a free trade zone with the Eurasian Economic Union (EAEU) have progressed, offering a promising boost to India’s trade presence in Eurasia (Trans.ru, August 25). The prospective free trade zone increases the need for interregional transport connectivity, which is the purpose of the INSTC and the Chabahar Agreement signed by India, Iran, and Afghanistan in 2016. In 2018, it was the Afghan factor at the time that helped New Delhi convince Washington to provide a sanctions waiver for Chabahar. The seaport serves as a trade gateway for Indian manufacturers to reach Iran, Afghanistan, and Central Asia. In May 2024, India signed a 10-year contract with Iran to operate the port and pledged an additional $370 million to transform the transport hub’s infrastructure (The Hindu, May 13, 2024).

In 2023, trade between India and the Central Asian countries amounted to $1.7 billion (Eurasian Development Bank/India Exim Bank, 2025). Kazakhstan accounted for over half of India’s regional imports, which consisted mainly of mineral fuels and oil, and Uzbekistan was the primary Central Asian buyer of Indian exports. 

In 2024, the value of trade between Uzbekistan and India approached $1 billion (National Statistics Committee of Uzbekistan, January 21). Plans are in place to grow this trade through a new multimodal corridor between Uzbekistan, Turkmenistan, Iran, and India, utilizing the port of Chabahar (see EDM, October 16, 2023). In the Central Asian segment, the new route could be extended to Kyrgyzstan and Tajikistan for their access to the open seas.  

Since 2020, Tashkent has been engaging in dialogue with New Delhi and Tehran within a special working group on the joint use of the deep-water port of Chabahar, which has direct access to the Indian Ocean. In 2023, the group reached an agreement to construct a logistics center, along with terminals and warehouses, at the Shahid Beheshti Port in Chabahar (Spot, June 19, 2023; see EDM, June 21, 2023). These plans have not yet been implemented, which may signal Uzbekistan’s cautious approach to investing in the development of the Iranian Chabahar port. Renewed sanctions on Chabahar are likely to reinforce this caution, but Uzbekistan is unlikely ignore the port’s transit potential—Tashkent needs to diversify its southern logistics routes to minimize security risks and optimize international transportation costs (see EDM, May 7, 2024, April 8, May 21, July 7).

The first trilateral political consultation meeting between Iran, India, and Uzbekistan was held in Tehran on September 9, during which the countries discussed the effective use of Iran’s port facilities and transport infrastructure to expand mutual trade (Iran Ministry of Foreign Affairs, September 13). During the meeting, however, the Uzbek delegation did not mention the implementation of investment agreements in Chabahar.

Investing in the Iranian port is unlikely to be profitable for Tashkent, given that Uzbekistan is only involved in 5.5 percent of cargo traffic between Central Asia and India. Most Central Asian trade with India occurs with Kazakhstan (61.1 percent) and Turkmenistan (29.4 percent). This is partly due to the composition of Kazakh and Turkmen exports to India, which consist mainly of hydrocarbon raw materials and inorganic chemical products (Centermano.uz, July 9). Another reason is that Astana and Ashgabat participate in the flagship Indo-Russian-Iranian project INSTC, from which Uzbekistan was excluded due to the construction of the Kazakhstan–Turkmenistan–Iran railway in 2014 (see EDM, October 3, 2014, January 14, December 4, 2015).

In 2022, Tashkent proposed an alternate land route connecting Russia and India via Central Asia, Afghanistan, and Pakistan, bypassing Iran (Uzbekistan Ministry of Transportation, November 25, 2022). A year later, as part of the Shanghai Cooperation Organization (SCO) Member States Transport Forum, the process of creating a 5,532-kilometer (3,440-mile) multimodal transport corridor between Belarus, Russia, Kazakhstan, Uzbekistan, Afghanistan, and Pakistan was launched (see EDM, January 15). This new logistics chain aims to enable cargo to be transported from northern Eurasia to South Asia in just 20 days—three times faster than by sea. Extending the corridor to Europe and India will create conditions for land transport connectivity between two major economic centers of world trade. If the Uzbekistan–Afghanistan–Pakistan railway (the Trans-Afghan or Kabul Corridor) is constructed, and if the transport systems of the Commonwealth of Independent States countries and the Indian subcontinent are integrated, the resulting land route would be monomodal, making it streamlined and more economically viable (see EDM, July 7).

In this regard, Tashkent is accelerating the implementation of the Kabul Corridor project, which is estimated to cost around $7 billion and follows the Termez–Naibabad–Maidanshahr–Logar–Kharlachi route. On July 17, Uzbekistan, Afghanistan, and Pakistan signed an intergovernmental framework agreement for the feasibility study of the project (Tolo News, July 17). According to one preliminary estimate, the potential cargo flow on the Trans-Afghan railway is expected to be 22 million tons per year by 2030, increasing to 34 million tons by 2040 (YouTube/@ТранспортныекоридорыЦА, August 5). Most of this cargo will be in transit to farther-flung markets, including goods destined for India. 

Tashkent may strengthen cooperation with New Delhi at the diplomatic and ministerial levels to secure its support to develop a railway corridor through Afghanistan and Pakistan. Investment in this alternative route has a different, though significant, risk profile compared to Chabahar, based on the international isolation of Taliban-controlled Afghanistan. The Trans-Afghan Corridor could be realized through Uzbekistan’s initiative to form a unified SCO transport space, integrating the railway networks of the organization’s members (Institute for Advanced International Studies, September 8).