Updated on: Wednesday, May 29, 2019, 06:06 AM IST

India looks to counter US curbs on Iran oil import


Washington : India is likely to resist the American pressure on complying with the reimposed Iranian sanctions as it has been a traditional policy of New Delhi to enforce only UNSC-authorised sanctions, a Congressional report has told lawmakers. The Trump administration has threatened entities and countries with consequences if they do not bring down their import of Iranian oil to zero by November 4.

India, one of the biggest importers of Iranian oil, is unlikely to do so given its huge energy needs. The Trump administration is currently in talks with India on issues related to Iranian sanctions.

“India’s position has generally been that it will only enforce sanctions authorised by UN Security Council resolutions, rendering it likely that India will resist US efforts to compel it to comply with reimposed US sanctions such as those that mandate cuts in oil purchases from Iran,” the independent Congressional Research Service (CRS) said in its latest report on Iran.


In its report meant for US lawmakers to take informed decision, the CRS said India and Iran have overlapping histories and civilisations, and they are aligned on several strategic issues.

Tens of millions of India’s citizens are Shiite Muslims. Both countries have historically supported minority factions in Afghanistan that are generally at odds with Afghanistan’s dominant Pashtun community, said the report dated September 11. According to the CRS, as international sanctions on Iran increased in 2010-2013, India sought to preserve its longstanding ties with Iran while cooperating with the sanctions regime.

In 2010, India’s central bank ceased using a Tehran-based regional body, the Asian Clearing Union, to handle transactions with Iran. In January 2012, Iran agreed to accept India’s local currency, the rupee, to settle nearly half of its sales to India, it said. During 2011-2015, India reduced its purchases of Iranian oil, at some cost to its own development, in order to receive from the US administration exemptions from sanctions, the CRS said. India has increased oil purchases from Iran to nearly pre-2012 levels after sanctions were lifted, and in May 2016 India agreed to transfer to Iran about $6.5 billion that it owed for Iranian oil shipments but which was held up for payment due to sanctions, it said.


The CRS said some projects that India has pursued in Iran involve not only economic issues but national strategy.

“India has long sought to develop Iran’s Chabahar port, which would give India direct access to Afghanistan and Central Asia without relying on transit routes through Pakistan,” the report said.

Noting that India had hesitated to move forward on that project because of US opposition to projects that benefit Iran, the CRS said. India has said that the implementation of Joint Comprehensive Plan of Action (JCPOA) sanctions relief in January 2016 paved the way for work to begin in earnest on the Chabahar project.


India, Iran and Afghanistan held a ceremony in May 2016 to herald the start of work on the port based on an Indian pledge of $500 million investment in it, with Iran to provide the remaining $500 million.

Work was slowed by the difficulty equipment suppliers had in obtaining financing for the project, a consequence of hesitancy among banks about whether the US might still try to sanction the project.

The CRS report said that during a visit to India in June 2018, US Ambassador to the UN Nikki Haley said the Trump administration might consider providing exemptions to US sanctions to enable the Chabahar work to continue because the project is vital to Afghanistan’s development and reducing its dependence on Pakistan.

India has already begun shipping wheat to Afghanistan through this new port. During Iran President Hassan Rouhani’s visit to India in February 2018, he and India’s Prime Minister Narendra Modi signed memoranda outlining future expanded energy cooperation, the report added.

The US, which is renewing sanctions on Iran, reimposed some of the financial sanctions from August 6, while those affecting Iran’s petroleum sector will come into effect from November 4.

Refiners to pay in rupees for oil

New Delhi: India may revert to paying Iran in rupees for the oil it buys from its third largest supplier as US sanctions will from November 4 block use of US dollars to settle such trades, a top official said on Thursday. Oil refiners such as state-owned Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals (MRPL) could use UCO Bank or IDBI Bank to route oil payments to Iran, the official added.

The official said refiners have booked oil cargoes from Iran for the current month as well as for October. Payment for oil bought in September would be due in November as Iran provides a 60 days credit period. India had planned to import about 25 million tonnes of crude oil from Iran in the current fiscal, up from 22.6 million tonnes imported in 2017-18.

But the actual volumes imported may be far less as companies like Reliance Industries have totally stopped buying oil from Iran and others too are scaling it down in hope of winning a sanction waiver from the US.

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Published on: Friday, September 21, 2018, 12:19 AM IST