India and Iran may soon begin exploratory talks on resumption of bilateral trade in items such as crude oil and fertilisers that have faced US sanctions since 2019 as Iran and the US are trying to expedite talks on reviving the Iranian nuclear deal of 2015, a source has said.
A high-level team from Iran, comprising senior government officials and representatives of public sector companies, is scheduled to visit New Delhi soon for talks with officials led by Ministry of External Affairs. “There is a hope that Iran sanctions will be lifted as progress has been reported in talks between the US and Iran in Vienna on reviving the nuclear agreement. So, we have to position ourselves for that. An Iranian team of senior officials will visit India soon to discuss how to go about resuming trade in items such as oil and fertilisers,” the source tracking developments in the area told BusinessLine.
India’s purchase of oil and petroleum products from Iran came to a complete halt after the US, under former President Donald Trump, announced third country sanctions against those buying oil from the country in mid- 2019. The US, in 2018, had withdrawn from the Joint Comprehensive Plan of Action (JCPOA), also known as the `Iran nuclear deal’ reached between Iran and the five permanent members of the UN Security Council in 2015.
“After the US withdrew from the nuclear deal, India and Iran used the rupee-rial payment mechanism to trade in oil and other goods to avoid banking sanctions. It worked well and Iran was India’s third largest crude supplier in 2018-19 accounting for 23.9 million tonne of crude in 2018-19. But once US banned oil trade with Iran, not only did India’s oil imports from the country stopp but overall bilateral trade was hit as the rupee balance in Iran’s accounts in Indian banks ran low and Iran couldn’t import much from India,” the source explained.
India-Iran bilateral trade in 2021-22 fell to about $ 2 billion compared to $16 billion in 2018-19.
“With the Biden regime resuming talks on reviving the Iran nuclear deal, there are now indications that some sanctions may be lifted to begin with. The Iranian team is eager to come to India to discuss possible mechanisms and deals so that trade can resume immediately after certain sanctions are gone.” the source said.
Recently Iranian Ambassador to India Ali Chegeni offered to restart oil trade with India by relaunching rupee-rial trade. “It is too early to talk about the details of the possibilities with Iran. These are initial talks. Much depends on what happens in Vienna between US and Iran,” the source added.