India guessed that the Trump administration would eventually leave JCPOA and reimpose sanctions on Iran, said the envoy, adding that for this reason, it created a special financial mechanism to ensure its trade relations with Iran would be protected from sanctions.
The envoy, who was talking at the Iran-India trade conference, held at the Iran Chamber of Commerce, Industries, Mines and Agriculture, said that to maintain its business relationship with Iran, India had held very difficult talks with US officials.
We considered the last model we had with our business with Iran, said the official, adding that to accelerate business relations with Iran, we set up a specific financial mechanism.
On March 4, the IDBI Bank received the Indian government’s nod to handle import and export transactions with Iran, a move which would help in promoting two-way trade amid US sanctions on the Persian Gulf country, industry sources said.
According to sources, IDBI Bank has been identified to route the payments. UCO Bank had in the previous round of sanctions handled rupee payments.
Last May, US President Donald Trump withdrew from the 2015 nuclear accord with Iran, reimposing economic sanctions against the country. Some sanctions took effect as of August 6, 2018, while those affecting the oil and banking sectors began on November 4, 2018.
Iran is India’s third-largest oil supplier, after Iraq and Saudi Arabia. It was India’s second-largest supplier of crude oil, after Saudi Arabia, until 2010-11, but sanctions by the West over its nuclear program relegated it to the seventh spot in subsequent years. In 2013-14 and 2014-15, India bought 11 million tons and 10.95 million tons of crude, respectively, from Iran.
Bilateral trade between India and Iran increased to $13.8 billion in 2017-18, from $12.9 billion in the previous fiscal year. However, India's exports to Iran were only worth $2.5 billion.
The Federation of Indian Export Organizations (FIEO) said that more banks should obtain permission for trade with Iran.
“This will generate healthy competition between UCO and IDBI, encouraging them to be more customer-friendly,” FIEO President Ganesh Kumar Gupta said.