EghtesadOnline: Weeks after India stopped oil imports from Iran, the Modi government is keen to resume supply from the country and is looking at ways to make payments in Indian rupee to get around US sanctions, two government sources told ThePrint, India's digital platform for latest news and reports.
The Modi government, which is returning with a bigger mandate in the Lok Sabha elections, will immediately initiate talks with Iran to discuss steps that will allow it to resume oil imports, said the sources.
However, the quantum of import is expected to drop significantly.
India stopped oil imports from Iran after the six-month sanction waiver from the US ended on 2 May, according to Financial Tribune.
“The government is not keen on this ban. It is keen to resume imports, though the quantum will be limited,” said a senior government official who did not wish to be identified.
The official said Iran’s Pasargad Bank, which got the Reserve Bank of India’s nod to open a branch in Mumbai, may be used to make payments for the oil supply.
“Payments can be deposited in the Iranian bank and then Iranian authorities can decide how to utilize the money,” the official said.
With the government looking to make payments in rupee, the official said, “These talks have been held earlier too but got stalled due to elections. They will be revived and this will be one of the first focus areas of the government.”
In the past, India has also bartered goods with Iran in exchange for crude oil.
A second government official and an oil analyst, both of who spoke on the condition of anonymity, said this option is also available to India but considering the “huge payments” incurred with oil imports, it will not be feasible to look at this measure as the only alternative.
Once a mechanism has been put in place, India will also have to resolve the issue of insurance for the shipment of crude.
“Since many international companies may not agree to provide cover, the policymakers will have to figure out a way,” one of the two officials said.