The degree to which India and the Indian firms will cooperate with the Trump administration's reimposed sanctions on Iran is not certain, a Congressional report has said, asserting that New Delhi does not agree with the US that the Tehran has violated the nuclear deal.
According to the independent Congressional Research Service report, India, like the European Union nations, does not agree with the American assessment that Iran has violated the nuclear deal from which the US has now withdrawn.
"The degree to which Indian firms and the government of India will cooperate with reimposed US sanctions is not certain. As do the EU countries, Indian leaders assert that Iran did not violate the Joint Comprehensive Plan of Action (JCPOA) and sanctions should not be reimposed on it," said the report on the Iranian nuclear deal from which President Donald Trump announced the US' withdrawal early this month.
As America withdrew from the JCPOA, Trump also announced that the US sanctions against Iran would kick in, as a result of which any country or companies having trading relationship with Iran would be subject to secondary sanctions.
As of now, India is the second largest buyer of Iranian oil after China.
India's purchase of Iranian oil is estimated to have nearly doubled from 320,000 barrels per day on an average in 2011 to 620,000 in April 2018, the report said.
China with current estimates of an average 700,000 barrels per day is the largest buyer of Iranian oil.
In its latest report prepared for lawmakers, the CRS notes that India implemented UN-mandated sanctions against Iran and generally cooperated with multilateral efforts to use sanctions to achieve a nuclear agreement with Tehran.
"During 2010-2016, India's private sector described Iran as a 'controversial market' a term used by many international firms to describe markets that entail reputational and financial risks," it said.
In 2010, India's central bank ceased using a Tehran-based regional body, the Asian Clearing Union, to handle transactions with Iran.
In January 2012, Iran agreed to accept Indian currency rupee to settle 45 per cent of its oil sales to India, which Iran mostly used to buy Indian wheat, pharmaceuticals, rice, sugar, soybeans, auto parts and other products.
"India reduced its imports of Iranian oil substantially after 2011, reducing its purchases to six per cent of its oil imports by 2013, down from over 16 per cent in 2008. India incurred significant costs to retrofit refineries that were handling Iranian crude," it said.
However, since the JCPOA oil imports rebounded to levels well above those of 2011, the report said.
Indian firms ended or slowed work on investments in Iranian oil and gas fields during 2012-2016, but reportedly resumed work after sanctions were lifted.
After international sanctions were lifted, India reportedly also paid Iran the USD 6.5 billion it owed for oil purchased during 2012-2016, it said.
The report said in 2015 India and Iran agreed that India would help develop Iran's Chabahar port that would enable India to trade with Afghanistan unimpeded by Pakistan.
"With sanctions lifted, the project no longer entails risk to Indian firms involved. In May 2016, Indian Prime Minister Narendra Modi visited Iran and signed an agreement to invest USD 500 million to develop the port and related infrastructure. Construction at the port is proceeding," it said.
The reimposition of US secondary sanctions will likely harm Iran's economy, but the degree to which it does so will depend on the extent to which foreign governments and companies cooperate with the reimposed sanctions, the report said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)