NEW DELHI – India is likely to resume its importing of Iranian crudeproducts, most probably from June, as the two countries will discuss searchfor a mechanism to trade and bypass Washington’s sanctions.
“Import will not halt for long; nevertheless, the quantum may be subduedfor initial months,” a government official said on Tuesday.
Fresh talks are expected resume shortly after the formation of the Indiangovernment in Narendra Modi’s second term, which may have a new petroleumminister in place of Dharmendra Pradhan.
Last October, India’s Union Minister Nitin Gadkari mentioned a paymentsystems that would be involved if the two countries agreed to continue oiltrade under the sanction regime. As per the plan, payment would be madethrough Iranian private bank Pasargad, which was allowed to open a branchin Mumbai in 2018. India’s UCO Bank and IDBI Bank, which used to routepayments during previous US sanctionslink Tehran, would also be usedas payment channels.
Difficulties arose when the US conveyed to New Delhi that India’s “escrowaccount” used for Rupee-Rial trade cannot be operated after 2 May. Earlier,India had an option to trade in its national currency to escape thesanctions. Under the Rupee-Rial mechanism, about 45 per cent of the oilpayments to Iran were made in rupees through UCO Bank which was usedby Iran to make payments for imports of various products from India.
It is easier to trade in domestic currency as India has the option to routepayment through one of India’s state-owned banks, like UCO Bank, which hasthe least exposure in the US market. But now this route is also under thescrutiny of the Donald Trump administration — this is why the two countriesare looking to devise a new payment mechanism.
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Indian External Affairs Minister Sushma Swaraj during the meeting with herIranian counterpart Mohammad Javad Zarif on 14 May conveyed that a decisionregarding the purchase of Iranian crude would only take place after thecountry’s general elections conclude on 23 May.
In the interim, India ended its imports of Iranian oil, Indian Ambassadorto the United States Harsh Shringla told reporters at the country’s embassyin Washington on 23 May.
Shringla pointed out that India imported Iranian oil in April. India optedto follow the US sanctions link after theTrump administration decided to end the waivers on 2 May that it grantedto eight of Iran’s top oil customers — China, India, Italy, Japan, SouthKorea, Taiwan, Greece and Turkey — last November. -Sputnik
