Indian officials are in negotiations with the United States government to extend a waiver beyond May 4 that would allow the South Asian country to import Iranian oil without any repercussions. India was granted a six-month waiver to purchase oil from Iran after American sanctions on Iran went into effect in November 2018.
“We are engaging with the U.S.,” India's Ministry of External Affairs spokesperson Raveesh Kumar said on April 4 according to WionNews.com. “We have continued to engage with the U.S. administration. The waiver lapses on the 4th of May, let us wait and see what happens. But, the important thing is we will continue our engagement with the U.S. to see if we are taking care of our energy security.”
In November, the U.S. granted a six-month waiver to India, China, Greece, Italy, Taiwan, Japan, Turkey and South Korea to continue importing oil from Iran, as President Trump had the U.S. unilaterally withdraw from the 2015 Iran nuclear deal and re-imposed sanctions on the country.
India, the world's third largest oil consumer, meets more than 80 percent of its oil needs through imports. Iran is India’s third largest supplier, after Iraq and Saudi Arabia, and meets about 10 percent of India's total need.
"India used to import about 9.4 per cent of its crude from Iran. We have been gradually replacing that with Saudi crude and even U.S. shale oil. However, price differentials are huge, especially as crude prices are firming up,” Indian officials involved in the negotiations said according to New Indian Express. “We will bring down our imports further, but for the time being, we need an extended waiver.”
The volume of trade between Iran and India stands between $10 billion and $13 billion. Iran also plays an important role in India's connectivity to Afghanistan via the Chabahar port along the coastline of Iran. Earlier this year, India took over operations at Chabahar, opening a new strategic route connecting Iran, India and Afghanistan, and bypassing India’s rival Pakistan, which is developing its Gwadar port with Chinese assistance. Chabahar is expected to help India gain access to markets in central and west Asia.
In 2016, Iran and India signed a deal to equip and operate containers and multi-purpose terminals at Shahid Beheshti port in Chabahar with a capital investment of $85.21 million and annual expenditure of $22.95 million on a 10-year lease.
“With Chabahar Port, India and Iran can start luxury ships for tourism, which will take 72 hours. It’s a very inexpensive route compared to [doing it by air],” Iranian parliamentarian Hamidreza Fouladgar said in a meeting with Indian officials in Mumbai in March, according to Aftabir.com. “Chabahar is connected to Tehran through rail. There is a plan to introduce a special tourist train throughout Iran.”
The United States has pressured countries to reduce oil imports from Iran, threatening economic repercussions if they do not. This presents a problem for India, which is the second-largest Iranian oil buyer after China. It has limited its monthly purchases to 1.25 million tons, or 15 million tons per year (300,000 thousand barrels per day).