The US has granted an exemption from certain sanctions to India for the development of the Chabahar Port in Iran, and will also build a railway line to connect the port with Afghanistan.

India’s Shipping Ministry expects to start operations at the port by the end of this month.

The US exemptions end months of speculation over the fate of the port, which is funded by India.

Citing an unnamed official, The Hindu Business Line reported that the waiver has also re-opened the chances of paying the Middle Eastern oil producer in Euros.

India chose Bandar Abbas-based Kaveh Port and Marine Services company to operate the port on a temporary basis for 18 months until a full-time contractor is selected to manage, operate and maintain (MOM) it by India Ports Global, a state-owned company building the project.

Commercial operation at Chabahar Port has faced delays due to difficulties in paying the temporary contractor as a result of banking problems with Iran.

The official told the publication: “To overcome this hurdle, Iran had agreed to accept payment in rupees. But, with this changed scenario, whether they will insist on taking payment in Euros, we’ll have to see and discuss that with Iran and sort it out.

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“Making payment in Euros should not be a problem now since Chabahar has been exempted from the sanctions, so banking transactions should not be an issue. The waiver granted by the US will allow us to ask Kaveh to start operations.”

“The trade between the two nations is currently estimated to be $16bn.”

In 2016, India Ports Global and Aria Banader Iranian Port signed an agreement to operate the container and multi-purpose terminals during Phase 1 of Chabahar Port with a capital investment of $85.21m for a ten-year lease period.

As per the agreement between the two countries, revenues earned from cargo will be shared by both.

The port is located in the Sistan-Baluchistan Province of Iran. It is significant for India as it would boost connectivity and trade with Afghanistan and other Central Asian countries.

Under the first phase, Chabahar port will have a container terminal with two berths of 640m quay length and a depth of 16m, as well as a multi-purpose terminal with a quay length of 600m.

The port will improve bilateral trade with Iran. The trade between the two nations is currently estimated to be $16bn.