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Toeing the US Line on Iran

What is India’s position on the sanctions imposed by US on Iran?

1. India’s reluctance to protest these unilateral sanctions demonstrates its eagerness to play a junior partner of the US in world politics.

2. India also expressed its inability to take any major decision on the issue during the ongoing national elections and has hoped that the new government after the election will take a decisive position.

3. Indian companies, on the other hand, have already stopped buying Iranian oil and are looking for alternative suppliers.

Why are the current set of sanctions imposed on Iran appear to be wrong?

1. The current set of sanctions imposed on Iran by the USA is in defiance of any established international legal regime.

2. The US sanctions are unilateral and have no legal justifications.

3. They are the result of diplomatic and military calculations of Israel, Saudi Arabia and American trio, and India has nothing to gain from it.

How will it affect India?

1. India was importing around 1.2 million tonnes of oil per month from Iran which was about 10% of its total oil imports.

2. Iran was India’s third largest supplier of oil after Saudi Arabia and Iraq.

3. India has several advantages in its oil trade with Iran.

4. The Iranian oil was not only cheaper but also came with a longer credit period.

5. India paid most of the price in euros, and the rest in rupees, which reduced the dependence of the US dollar. A part of the rupee payment was also in kind. India got to pay a part of the cost in kind through the supply of rice, medicines and other commodities.

6. India imports 84% of its oil requirements and hence domestic prices are dependent on the international market.

7. Rising trade deficit, and huge oil and gas bills (more than $100 billion in 2018–19) make it necessary for India to look for cheaper and more reliable oil supplies.

8. Indian refineries will have to negotiate for additional supplies from Saudi Arabia or the United Arab Emirates.

9. It is a double blow for the Indian oil market as some refineries are already under US pressure to stop buying oil from Venezuela.

10. The crude oil from Iran and Venezuela provides wider margins to Indian refiners.

11. The end of imports from these countries will increase the costs, which will eventually be transferred to the consumers leading to a steep rise in the prices of oil and other petroleum products post the elections.

Where will it affect India on long run?

1. Compliance with the sanctions may also mean that India will lose the chance of getting stakes in the Farzad B gas fields.

2. India has already lost the opportunity in the last decade to build a land pipeline from Iran to supply gas due to its attempts to please the US.

3. This makes India vulnerable to any hostility in the Persian Gulf region from where it imports the majority of its energy requirements through the sea routes.

4. The fate of India’s ambitious North–South Corridor that will provide land routes to Afghanistan, Central Asia and Europe is uncertain.

5. India has invested heavily in the Iranian port of Chabahar in the Arabian Sea and is also important in Indian attempts to create an alternative market in West Asia for its exports.

6. The US needs India to balance China’s rise in the region.