New Delhi: India has “no immediate plans” to resume oil purchases from Iran as American sanctions remain in place, and it will take time for the incoming Joe Biden administration to return to the Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), ThePrint has learnt.
Sources said India believes the Biden administration will not have an easy time resuming talks with Iran under the JCPOA, or bringing Tehran back in line with the terms of the agreement.
The sources said the sanctions imposed by the outgoing Donald Trump administration will thus remain in place for some time, and so, India is taking a “cautious approach”. The expectation is that with the US returning to the JCPOA, a lot of “tough negotiations will take place” before other countries are able to do business with Iran.
As soon as the US begins discussing the JCPOA, Iran’s first demand will be to lift the sanctions.
“Only after all this is done will other avenues open up and world businesses will start engaging with Iran again,” said a source who refused to be identified.
Iran was among the top three countries from where India used to import oil. From the Iranian perspective, India was its second biggest oil customer after China. However, under pressure from the US, India brought its oil purchase from Iran down to zero in May 2019.
Last month, Oil Minister Dharmendra Pradhan had stated that India hopes to resume crude oil imports from Iran after Biden takes charge as US President on 20 January.
The Trump administration had walked out of the JCPOA in May 2018, three years after it was signed by the Barack Obama administration alongside the UK, France, China, Russia and Germany. Iran said last year that it would stop abiding by the deal, which seeks to restrict the country’s nuclear activities.
Due to the economic sanctions imposed by the US, India has also not been able to continue with its plans for the expansion of the Chabahar Port project, which entailed building of a rail and road network.
Last year, in September, Defence Minister Rajnath Singh and External Affairs Minister S. Jaishankar had made separate trips to Iran, at a time when Beijing and Tehran were preparing to sign a whopping $400 billion economic and strategic deal.
In December, India, Iran and Uzbekistan held a trilateral working group meeting on the joint use of Chabahar Port as a transit port.
“Besides Uzbekistan, other Central Asian countries have also shown interest in using the port. India seeks to cooperate closely with regional countries on this issue,” the Ministry of External Affairs had said in a statement.
Another fallout of India not resuming crude oil purchases from Iran has been that it is rapidly losing its share in the west Asian country’s basmati rice market, which is being taken over by Pakistan.
“The core of our future relations revolves around the energy sector because of the huge reserves they have. They were once our biggest suppliers, so clearly, we want to restore the energy ties,” India’s former foreign secretary Kanwal Sibal told ThePrint.
“It will not be easy for the US to come back to the JCPOA without Joe Biden facing some new issues. For him, it also won’t be easy to convince America domestically why JCPOA is needed,” Sibal explained.
“Biden has a lot of hurdles to cross, so it’s better we wait before suddenly resuming oil purchases from Iran. We have found alternatives to Iran and crude prices have also crashed. So, it’s best to wait and let things unfold, else the geopolitical cost will be huge,” he added.