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India-Iran Oil Issue

India-Iran Oil Trade :

Why it is part of Analysis :- In light of Trump’s diktat on stopping oil imports from Iran, India must craft its policy carefully, so that it protects its  interests with Iran.


Background: In 2008–09, Iranian oil accounted for nearly 16.5% of India's crude oil imports. Indian oil imports from Iran increased by 9.5% in 2008–09 due to which Iran emerged as India's second largest oil supplier.About 40% of the refined oil consumed by India is imported from Iran.

Present Scenario:-At present, the figures make India Iran’s biggest buyer after China, and as a result, a target for the U.S. which has declared a campaign to “isolate Iran” after the Trump administration withdrew from the multilateral nuclear deal.


How India Dealt with this scenario in Past: India operationalized a ‘rupee-rial’ mechanism, under which half of what it owed Tehran for oil imports would be held in a UCO Bank account and made available to Iranian companies to use for any imports from India.


Why India Needs to balance:

-          The stakes are higher for the government. Ties with the U.S. are under strain over several issues, including U.S. trade tariffs and India’s defence procurement from Russia, and a major divergence on Iran will exacerbate the problem with India’s biggest trading partner and fastest growing defence partnership.

-          Any U.S. sanctions will make it hard for refiners, insurers and transport companies to facilitate oil trade, even if India wishes to continue it.

-          India wants to buy oil Stakes in Fazad-B oil field.

-          India has also committed itself to investing $500 million to build berths at Chabahar’s Shahid Beheshti Port.

-          $2 billion to build a rail line through the Zahedan province to Afghanistan.

-          North-South Transport Corridor to be connected from Iran for exporting goods in Central Asia and Russia.

           Why Iran needs India:

  1. Infracture: The Chabahar port has also been jointly financed by Iran and India. India alone plans to invest 20 Billion US dollars towards development of Chabahar port.
  2. A highway between Zaranj and Delaram (Zaranj-Delaram Highway) is being built with financial support from India.
  3. Education: There are about 8,000 Iranian students studying in India. India provides 67 scholarships every year to Iranian students.
  4. Religion: The world's largest population of Zoroastrians are the Parsi community in India.During the Arab conquest of Persia, many Zoroastrians migrated to the western coast of India and as a result the country has the largest population of Zoroastrians in the world.

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