Sunday, February 12, 2012

India’s Oil Trade with Iran : Necessary and Compulsive ?

With the growing Oil dependence of India on Iran, the United States stands against this trading as the country is planning for economic sanctions against India. Why the United States opposes the move, what effect does this trade have on US – India’s bilateral ties and what if India decides to stop its oil trading are the questions in discussion.

Indian industries are fuelled only by the imported oil in most of the regions even though the country has its own oil reserves. Iran’s oil constitutes of 12 percent of India’s imports and it is difficult at this point of time to just stop it at once. India holds firm on its stand to trade with Iran, despite the pressures from US, Europe and also the increasing conflicts or disturbances regarding Indo – US civil nuclear cooperation, military sales and trade sanctions. The reason is clear. India needs Iranian Oil to boom its growing cities such as Mumbai, New Delhi and Bangalore. There are some refineries built in India which do run only on Iranian oil. Stopping trade with Iran also puts them out of business, which the Indian government cannot afford given its economic condition now.

It also should be noted that India tried to reduce its dependence on Iranian oil in the recent past citing the reasons of US’ economic sanctions and the sanctions imposed by the Federal government on banks dealing with Iran. To counter this move, India has been paying the Iran companies through a bank in turkey, which may not also be possible after this year.

Well, the reasons that India prefers Iran oil are plenty, with the distance between the two countries is less than the middle east and oil can be transported easily, Iran offers India to pay 45 percent of the money in Indian rupees rather than US’ dollars (primary concern of US) and also looking into an option to pay the rest of the money through barter system, if not by money. India too, is against Iran developing nuclear weapons and asks the country to disclose itself as a non nuclear nation under the NPT. This is a concern shared along with the US, but is not that strong as to stop the whole trading thing with Iran. The reason – India needs Oil and Iran has it.

Though talks are going on between India and United States regarding this oil trade, it is difficult to expect India to back out at this point and also much can be expected from the United States in the form of sanctions or lesser help in other regards such as nuclear cooperation and military dealings.

Images courtesy: Google.com

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3 comments:

  1. would be great if u can post some references too..

    i had never been into these issues but your writing sprakled some interest...good job.. keep posting

    ReplyDelete
  2. Well, i will try to look into some. this post was just my understanding of the deal after reading newspapers and such..

    ReplyDelete
  3. You took a complicated idea and broke it down to make me want to read more. I’m pleased that you shared this fresh view. Thanks. Energy Trading

    ReplyDelete