Weeks after India stopped oil imports from Iran, the government of Indian Prime Minister Narendra Modi is keen to resume supply from the Middle Eastern country and is looking at ways to make payments in Indian rupee to get around US sanctions, two government sources told ThePrint.
The Modi government, which is returning with a bigger mandate in the Lok Sabha (legislative) elections, will immediately initiate talks with Iran to discuss steps that will allow it to resume oil imports, said the sources.
However, the quantum of import is expected to drop significantly.
India stopped oil imports from Iran after the six-month sanction waiver from the US ended on 2 May.
“The government is not keen on this (ban). It is keen to resume imports, though the quantum will be limited,” said a senior government official who didn’t wish to be identified.
The official said Iran’s Bank Pasargad, which got the Reserve Bank of India’s nod to open a branch in Mumbai, may be used to make payments for the oil supply.
“Payments can be deposited in the Iranian bank and then Iranian authorities can decide how to utilise the money,” the official said.
With the government looking to make payments in rupee, the official said, “These talks have been held earlier too but got stalled due to elections. They will be revived and this will be one of the first focus areas of the government.”
Iranian Foreign Minister Mohamamd Javad Zarif visited India 10 days ago as those mamoth elections were taking place.
A second government official and an oil analyst, both of who spoke on the condition of anonymity, said this option is also available to India but considering the “huge payments” incurred with oil imports, it will not be feasible to look at this measure as the only alternative.
Once a mechanism has been put in place, India will also have to resolve the issue of insurance for the shipment of crude.
“Since many international companies may not agree to provide cover, the policymakers will have to figure out a way,” one of the two officials said.
India imported about five percent more oil from Iran in the last fiscal year through March as companies raised purchases ahead of US sanctions against Tehran from November, preliminary tanker arrival data obtained from shipping and industry sources showed.
Back in March, days before the waivers expired, Indian Ambassador to Iran Gaddam Dharmendra told Iran Chamber Newsroom that New Delhi is optimistic about obtaining a second exemption that was not renewed for any of the eight countries.
Video: India optimistic about securing 2nd Iran oil waiver: Indian envoy