Last updated: 8 May, 2012

India tells US that Iran is an important oil source

India said Tuesday it shared the United States’ goal of preventing Iran from building a nuclear weapon, but insisted the Islamic republic remained an “important source of oil”.

Visiting US Secretary of State Hillary Clinton has urged India to reduce its imports of Iranian oil, while a new US law will next month slap sanctions on nations that buy oil from Tehran.

India, which depended on Iran for 12 percent of its imports last year, says it has cut Iranian imports substantially despite initially insisting it would not join US and European-led efforts to choke off Tehran’s oil revenues.

“We have a strong interest in a peaceful and negotiated settlement of issues relating to Iran’s nuclear programme,” Indian Foreign Minister S.M. Krishna told a joint news conference with Clinton.

Krishna acknowledged that Iran “remains an important source of oil for us” and said of the reductions: “Ultimately, it reflects the decision that refineries make based on commercial, financial and technical considerations.”

“This issue is not a source of discord between our two countries,” he insisted.

India, which is heavily dependent on energy imports, remains the largest single buyer of Iranian oil.

Clinton commended India for reducing imports of Iranian oil and said that the United States was discussing with India how to find alternative sources for energy.

“The United States and India share the same goal: we both want to prevent Iran from getting a nuclear weapon,” Clinton said, calling India a “strong partner”.

Clinton said that Carlos Pascual, the US pointman on Iranian oil, would visit India next week for follow-up talks.

Under a new law, the United States will impose sanctions starting on June 28 on banks from countries that keep buying Iranian oil. The State Department has already exempted European Union nations and Japan.

Separately, a senior Indian official on Tuesday said New Delhi was keen to boost commercial ties with Iran, possibly with a preferential trade agreement which has been under discussion for several years between the two nations.

“It is time to do serious business,” Indian commerce ministry joint secretary Arvind Mehta told a 56-member Iranian trade delegation.

“You look East and we will look West to be partners in progress,” Mehta said.

The Iranian trade mission arrived on the same day as Clinton to explore commercial opportunities in India after an Indian business delegation visited the Persian Gulf nation in March.

India has been buying around $11 billion worth of oil from Iran a year but sells Tehran just under $3 billion in goods.

India needs to increase its exports to Iran as the Western sanctions campaign against Iran has been drying up dollar and euro payment routes that New Delhi was using to pay for Iranian oil imports.

India and Iran have worked out a deal under which New Delhi will pay for close to half of its Iranian oil imports in rupees. The rupee payments will be used by Iran to purchase Indian goods.