Why India will do oil business with Iran even after US sanctions?

After signing Joint Comprehensive Plan of Action (JCPoA) in July 2015, the Obama Administration gave relief to Iran by removing economic sanctions under the ‘Iran Nuclear Deal’,  who was hit by American sanctions for years due to its nuclear program. Even before the completion of 3rd year of ‘Iran Nuclear Deal’, US president Donald Trump decided to re-impose sanctions on Iran and has created difficulties for Iran’s already struggling economy.  Despite US threats, in this time of difficulties, India is deciding to not follow the US sanctions on Iran and to continue to trade with Iran and make Chabahar Port operational by 2019.

India will follow only UN sanctions on Iran, not US sanctions.

India will make Chabahar Port operational in Iran by 2019.

India-Iran will continue to trade despite US sanctions through Rupee-Rial payment mechanism.




 

Russia, China and European Union countries are discussing ways to continue  trade with Iran even after US sanctions on Iran will be in effect. Dozens of foreign companies operating in Iran have already announced to close their operation in Iran amid the fear of US sanctions. But, India is in regular contact with Iranian leadership and working in direction to develop the mechanism to continue trade with Iran.

India is second biggest buyer of Iran’s crude oil after China and exports rice to Iran. Iran is strategically very important for India and that is why it’s  very important for India and Iran to make relations stronger and continue to trade with each other. It is important for both India and Iran to walk together to help  Afghanistan in fight against terrorism and for its development as well.

On Monday, 29 May, 2018, after US president announced to re-impose sanctions on Iran, Foreign Minister of India Sushma Swaraj said after meeting with Iranian Foreign Minister Mohammad Javed Zarif, that India will continue to buy oil from Iran. She said that India will follow only UN sanctions on Iran, not unilateral sanctions imposed by any specific country, such as United States.

As per the government statement India plans to make Chabahar Port operational by 2019. This announcement was made after US decided to re-impose sanctions on Iran. This port is the part of new transport corridor being developed for Afghanistan.  

India was given the operational control of first part of Chabahar port under the lease agreement signed in presence of Prime Minister of India Narendra Modi and President of Iran Hassan Rouhani in New Delhi on February 17, 2018.

Considering US sanctions, India and Iran have started working on Rupee-Rial payment mechanism to bypass US dollar payment system and to continue to trade in Iran’s Oil and energy sector. By using the ‘Rupee-Rial payment mechanism’, India will be able to get the crude oil for its energy requirements from Iran at decent price and will be able to protect itself from heat of US sanctions as well.

India and Iran are discussing ways to revive the ‘Rupee-Rial’ payment mechanism, which was developed 6 years ago and was operated through UCO bank of India. Iran will use the Rupee, it earns from export of oil to India, to pay for products that will be imported to Iran from India and both countries will be able to do business without any difficulties.

India will not follow the US sanctions on Iran and will continue to trade with Iran. The relations between both countries will become stronger and India will increase trade with Iran by making Chabahar port operational by 2019. India and Iran will adopt ‘Rupee-Rial’ payment mechanism and India will invest In Iran in its own currency – ‘Rupee’.

CM Jakhar

A news enthusiast by hobby, CM is the founder of Prediction Junction. He is always passionate to dig into the latest in the world and has a natural way of depicting his analysis and thoughts. His main motive is to bring the true and recent piece on where the world is heading.

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