After a step down from the Iran Nuclear deal by the US under the leadership of President Donald Trump, New Delhi hopes to remain unaffected on its trade ties with Iran, despite the renewed US sanctions on Iran.
In 2015, India had helped to stitch the Joint Comprehensive Plan of Action (JCPOA) and was seen as the main benefactor of the international co-operation that enabled Iran to be a peaceful nuclear power.
The Obama-era deal was dumped earlier this week by the US, and surprised many of its allies who are part of the deal. Iran had later stated that JCPOA will continue to exist between itself and five other nations—Russia, China, Japan, France and UK.
Read: What US pullout from Iran deal means for India
In 2011, while a sanction on Iran was underway, the gulf nation used to be one of the largest supplier of crude oil and natural gas to India. Currently, Iran has been relegated to the third place, with the UAE and Iraq coming up as the larger crude oil suppliers to India.
“Obama's partial lifting of the sanctions, allowed us to trade with Iran using other currencies and other banks. That arrangement did not ensure a surge in exports from India to Iran,” said Rita Teotia, Union commerce secretary, talking about the impact of the renewed US sanctions on Iran.
"Trade has remained more or less at the same level," said Teotia. She said the arrangement of rupee-riyal payment with Iran, is yet to be finalised.
Earlier, between 2011-13, to avoid being on the US radar, India had devised a way to bypass the US sanctions on Iran. At a time when Iran was India's major supply of energy commodities, New Delhi would issue payments to Tehran's oil marketing companies, through accounts opened in overseas branches of UCO bank, where payments were deposited in rupee or euros.
Post-2015, when the sanction on Iran was partially lifted by the US, the arrangement was called off, and India would make payments to Iran through a bank in Denmark in euro.
Now, India could resort to the earlier arrangement, as it had committed to increasing its offtake of crude oil and natural gas from Iran this year. "We do not expect any dip in trade due to the return of these sanctions. India's investment in Iran had also been low, so I am doubtful if any projects would get affected," said Teotia.
India had committed a $500-million investment in setting up the Chabahar port and ensuring connectivity from the port to Afghanistan and Russia by road linkages. However, the project is still awaiting permission of local authorities in Chabahar to commence work.
"It is expected that the fresh sanctions will prompt Iran to raise energy prices, afresh, as its exports in the last year had taken a huge hit," said a research report by Enincon, New Delhi-based oil and gas sector consultancy firm in a research note.