As pressure mounts on India to take a re-look at its energy ties with Iran, the debate has taken a predictable turn, one which assesses India-Iran relations through the prism of the US. Iran’s deputy foreign minister Seyed Abbas Araghchi, one of the key negotiators of the Joint Comprehensive Plan of Action (JCPOA), was in Delhi recently as was a US team, led by assistant secretary for terrorist financing Marshall Billingslea.
India has been steadfast in its opposition to the collapse of the JCPOA and is working with Europe and China to salvage the deal. But there are indications that the practical problems in implementing the terms of the deal after the US withdrawal are becoming insurmountable. New Delhi has approved a proposal from Iranian private lender Bank Pasargad to open a branch in Mumbai as it is exploring the possibility of reviving the rupee-rial arrangement it has used in the past for importing oil from Iran. At the same time, India continues to look at the possibility of being exempted from the US sanctions. The US has indicated that waivers could be given if there was significant reduction in oil imports from Iran.
The reality remains, however, that despite all the hype, India’s stakes in Iran are quite limited. Iran is indeed India’s third-largest oil supplier after Iraq and Saudi Arabia, but if push comes to shove, it can be replaced by other sources as the volume is manageable. The larger economic relationship is nothing much to write about, especially when compared to burgeoning trade ties with the Arab Gulf states.
Given this, suggestions by Iranian officials that India could lose “privileges” and revert back to dollar-denominated trade could have been avoided.