In the last four years,India has significantly reduced its imports of Iranian oil by volume from 16 per cent in 2008 to 10 per cent now,a US Congressional report has said.
“Since 2008,India has reduced its imports of Iranian oil by volume and as a percentage of India’s total oil imports.
Iran now only supplies about 10 per cent of India’s oil imports,down from over 16 per cent in 2008,” said the latest report of the Congressional Research Service (CRS).
The 80-page report by CRS – an independent research wing of the US Congress – said that Indian leaders have agreed to further reduce dependence on Iranian oil.
Iran is India’s second-largest oil supplier. India purchases about 12 percent of its total consumption from Iran.
“Publicly,Indian leaders have not pledged further significant reductions but press and industry accounts say that India plans further reductions along the lines of those negotiated in early 2012 by Japan,” the report said.
“Indian officials say that more drastic reductions would require significant investment to switch over refineries that handle Iranian crude,and will take time,” it said.
According to the report,India has been able to use the sanctions to force concessions from Iran,including an Iranian acceptance of payment for about 45 per cent of the oil sales in rupees,Indian currency but which is not convertible.
“Rupee payments will facilitate the settlement of payments for oil in the form of barter trade. Apparently in preparation for doing increased barter trade,India sent a large trade delegation to Iran (in March) to discuss increased exports to Iran of staple goods such as sugar and wheat – commodities not subject to international sanctions,” it said.
“Indian officials say some of their major companies,including the Tata conglomerate,have ended or reduced their business with Iran,” it said.
The CRS report said India is implementing UN sanctions against Iran but its cultural,economic,and historic ties to Iran might limit its willingness to go along with all aspects of US and EU sanctions on Iran.
“Because of India’s relations with Iran,many experts were surprised when India’s central bank,in late December 2010,announced that it would no longer use a regional body,the Asian Clearing Union,to handle transactions with Iran.”
Tehran-based Asian Clearing Union was set up in the 1970s by the United Nations to ease commerce among Asian nations.
“There have been allegations in recent years that Iran might be using the Clearing Union to handle transactions so as to avoid limitations imposed by European and other banks,and India’s move followed President Barack Obama’s visit there in November 2010.
“With India’s purchases of about 310,000 barrels per day of Iranian oil (about USD 11 billion worth of oil in 2011) made difficult by the move,in February 2011,India and Iran agreed to use an Iranian bank,Europaisch-Iranische Handelsbank (EIH) to clear the payments,” it said.
“On May 23,2011,the EU named EIH and about 100 other entities as Iran proliferation-related activities,rendering India and Iran again in search of an alternative payments mechanism. With approximately USD 6.3 billion in oil payments due Iran building up in an escrow account,in July 2011 Iran threatened to reduce or cut off entirely oil shipments to India,” the report said.
“In late July 2011,the two identified Turkey’s Halkbank as an acceptable processor,and,on September 4,2011,Iran’s Central Bank Governor said India had fully settled its debt.
The US law sanctioning dealings with Iran’s Central Bank led Halkbank in January 2012 to express the view that it might not be able to continue handling payments to Iran,” the report added.