After India’s Prime Minister Narendra Modi won the country’s elections, the government will immediately begin negotiations with Iran to pay in rupees for Iranian oil to bypass U.S. sanctions, Indian news outlet ThePrint reported on Tuesday, citing two government sources.

India, Iran’s second largest oil customer after China, was one of the eight countries that were granted six-month waivers to continue buying oil from Iran after the U.S. re-imposed sanctions on the Iranian oil industry in November. The United States, however, pursued a maximum pressure campaign against Iran last month and put an end to all sanction waivers for all Iranian oil buyers.

This put Indian refiners in a position to source the market for alternatives, and many of them, especially private companies, did, because they are wary of possible secondary U.S. sanctions if they continue to buy oil from Iran.

India’s Ambassador to the United States, Harsh Vardhan Shringla, said last week that India had officially ended all oil imports from Iran, but India has said that it would review its decision to stop buying Iranian oil once the elections are over.

After Modi won the elections, the government is now keen to discuss non-dollar payments and steps that would allow it to resume purchasing oil from Iran, according to ThePrint’s sources.

India is keen to resume imports from Iran, although the quantity may be limited, a senior government official told ThePrint, adding that Iran’s Pasargad Bank, which has been authorized to open a branch in India, could be used for the payments.

“Payments can be deposited in the Iranian bank and then Iranian authorities can decide how to utilise the money,” the official told ThePrint.

Talks with Iran were held before the elections, but were stalled until the elections end and results come in. Discussions will resume and this will be one of the top priorities of the Indian government, according to the official.

India and Iran, however, must also find a way to cover insurance for the oil tankers because many international shipping companies steer clear of any involvement with Iranian tanker insurance due to the U.S. sanctions on Iran, one official said.

By Tsvetana Paraskova for Oilprice.com

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