Foreign Minister Mohammad Javad Zarif says Iran is working with its traditional partners such as China, Russia and India to circumvent the US sanctions.

Zarif told reporters in New Delhi Tuesday that the European Union is moving more slowly than expected to facilitate non-dollar trade with Tehran through a mechanism called the special purpose vehicle (SPV).

"We continue to work with the Europeans for the special purpose vehicle but we will not wait for them [to act]," said Zarif who arrived in the Indian capital late Monday for a three-day visit.

"We are working with our traditional partners like India, China and Russia so that we continue to serve the interests of our people," he added.

Iran's Foreign Minister Mohammad Javad Zarif (R) is presented a bouquet by India's Union Minister Nitin Gadkari in New Delhi, Jan. 8, 2019. (Photo by Mizan)

EU foreign policy chief Federica Mogherini said last Wednesday that efforts to implement the special purpose vehicle for trade with Iran would continue well into 2019.

So far, the Europeans have defaulted on two deadlines which they had announced for bringing the SPV into operation. The vehicle purportedly aims to ensure economic benefits for Iran from staying in a 2015 nuclear deal after President Donald Trump recanted it in May.

On Saturday, Foreign Ministry spokesman Bahram Qassemi said Iran “holds Europe definitely responsible for failing to implement the financial mechanism," warning that the bloc should account for the "consequences" of the delay.

Qassemi said the European Union, not least the three European parties to the deal with Iran – Germany, France and Britain – “are captive and hostage to the American economy.”

As such, Tehran has not been sitting on its hands. On Sunday, Deputy Minister of Petroleum Amir Hossein Zamaninia said the country had found new customers for its oil.

“Despite US pressures on the Iranian oil market, the number of potential buyers of Iranian oil has significantly increased due to a competitive market, greed and the pursuit of more profit,” he told the Ministry of Petroleum’s Shana news agency.

Iran’s major oil clients continue to take shipments under a 180-day grace period given by the Trump administration to reduce liftings and find new suppliers.

As Iran’s second oil buyer, India is one of the countries given waivers by the US to continue Iranian oil imports.

Indian refiners to resume Iran oil imports

On Monday, Indian industry sources said state-run Bharat Petroleum Corp and Hindustan Petroleum Corp will each import 1 million barrels of Iranian oil in February after a gap of three months, taking the nation’s overall purchases from Tehran to 9 million barrels.

Top refiner Indian Oil Corp will lift 5 million barrels, while Mangalore Petrochemicals Ltd will buy 2 million barrels, Reuters quoted the sources as saying.

Earlier this month, New Delhi exempted rupee payments by Indian Oil Corp to Iran for crude oil imports from steep taxes.

“Iran has been and will be a reliable source of oil supply to India,” Zarif said on Monday as he arrived in New Delhi to take part in an annual research forum attended by economists and entrepreneurs.

Iranian FM Mohammad Javad Zarif (C) and Indian Minister of State for External Affairs Vijay Kumar Singh (R) signed documents for expansion of trade and economic ties at

an India-Iran business forum held in New Delhi, Jan. 8, 2019. (Photo by Mizan)

Zarif said he had used the opportunity to bring along “a big economic delegation” comprising of representatives from the private and state sectors for talks with their Indian counterparts.

Iran and India, the minister said, have maintained their good relations in the wake of the resumed US sanctions.

He cited “a good banking agreement with India which was signed following the sanctions, through which imports and exports as well as other financial needs will be handled.”

Bank Pasargad to open branch in Mumbai

India’s Union Minister Nitin Gadkari said after a meeting with Zarif Tuesday that Iran's Bank Pasargad will open a branch in Mumbai within the next three months to process mutual transactions.

The Iranian oil money is currently being kept in India’s government-owned UCO Bank in the Indian currency, which has led to a debt buildup because of the US sanctions.

The income deposited with an Indian bank is subject to a withholding tax of 40 percent plus other levies, further complicating oil purchases from Iran by India’s refiners.

Early this month, the Indian government intervened and exempted rupee payments to Iran from the steep tax.

Zarif said there were numerous areas of cooperation for boosting ties, one of them being Iran’s strategic port of Chabahar. “Indians are keen on being present in Chabahar as well as in Iran’s transit infrastructure,” he said.

Gadkari said India was hoping to fully operationalize Chabahar, with the Bank Pasargad branch in Mumbai intended to handle the related transactions.

Iran's FM Zarif (C-L) and India’s Union Minister Nitin Gadkari (C-R) hold talks in New Delhi on Jan. 8, 2019.

The minister termed his meeting with Zarif on Chabahar as "very fruitful," saying a lot of issues had been resolved during the detailed discussions.

"Chabahar Port is very important for us. We are working very hard on it... Some problems were there, but the Iranian government and their minister... are also in the process to resolve all the issues as early as possible. I am confident that we will be in a position to start full function of Chabahar Port at the earliest," he said.

Barter trade via Chabahar

Chabahar on the coast of the Gulf of Oman is Iran's southernmost city. The port is easily accessible from India's west coast and New Delhi hopes to utilize its transit potentials to embolden the country's connectivity footprints.

Gadkari said India had placed $85 million machinery order for Chabahar and the first ship from Brazil had already been received at the port.

India took over the operations of the first phase of Shahid Beheshti Port in Chabahar in December 2018. Commercial operations began the same month with the arrival of a Cyprus-registered bulk carrier with 72,458 tonnes of corn cargo.

Gadkari said the financial arrangement for Chabahar was also ready and proposals on a mutual barter system could also be considered.

India, he said, can provide steel rails and locomotive engines to Iran, and receive urea in return.

Zarif also noted that he was negotiating higher urea sales at "reasonable" rates with Indian officials.

"We are very happy that both UCO Bank of India and Pasargad Bank of Iran are getting started with the business," the Iranian minister said, adding the two banks will facilitate transactions relating to operation of berths at Chabahar Port.