SearchCrude Imports: India must trade more with Iran to contain rupee crisis - The Economic Times

Crude Imports: India must trade more with Iran to contain rupee crisis - The Economic Times...
economictimes.indiatimes.com 13/09/2013 News

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(Parseed) - (The Times of India)

By Rajeev Jayaswal
New Delhi has always affirmed that India does not seek a waiver from any country or group of countries on unilateral sanctions on importing Iranian crude. The Indian government told Parliament on several occasions that it was bound by UN sanctions, and that unilateral sanctions either by the US or the European Union do not impact its legitimate trade relations with Iran. But the figures say otherwise.

India's crude oil imports from Iran are shrinking gradually. The tacit reason is US pressure. That fact is evident from US Secretary of State John Kerry's announcement, three months ago. He said India qualified for an exception from (US-imposed) sanctions because it substantially reduced import of Iranian crude.

Thanks to this small mercy from big brother, we managed to import little more than 14 million tonnes of good quality Iranian crude in the previous financial year. But it was substantially low compared to about 22 MT we imported from Iran five years ago.

Is friendship of certain paranoid western nations so important that India should sever all historical ties with Iran? Fine, in this materialistic world, emotions have no place. But what if material gains are for real?

Tehran is willing to treat its old trade partner very favourably. It has offered to sell crude to refiners in Indian rupees, extend 90-day interest-free credit and not complain if payments are held up because of insurance or shipping hassles, which are mainly created by European banks and insurance companies.

Can India afford to ignore this offer? It had imported 185 MT crude oil worth $144 billion last year. Even if the demand is contained at that level, a deteriorating rupee against the US dollar is expected to raise our oil import bill by at least 10-15%. Is it not prudent to raise imports of Iranian crude and pay in rupees?

According to oil minister Veerappa Moily, India plans to import 13 MT of crude in the current financial year and save $8.5 billion in valuable foreign exchange. Can't it be raised to 22 MT, as it was five years ago? This will certainly help to contain our currency crisis. But besides Uncle Sam, there could be other practical problems.

The first is expected from Tehran itself. It will act pricey, knowing that the old friend is in real trouble. This is expected because the warmth was long lost as India chose that path. Iran was eager to engage with India until recently.

This writer remembers an informal conversation with Iranian oil minister Gholamhossein Nozari in Riyadh during the third Opec summit six years ago. He accosted Indian journalists at the cultural event organised by the host, Saudi Arabia. He asked for our help to convince the Indian government that Iran was more than willing to meet India's growing energy needs.

He offered oil and gas blocks, LNG and natural gas through the proposed Iran-Pakistan-India (IPI) pipeline. But it was a period when India was awestruck by the US and journalists had other pressing issues to pursue. Tehran offered to sell crude to refiners in Indian rupees, extend 90-day interest-free credit and not complain about late payments....

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