New Delhi yet to take decision on cutting oil imports from Tehran as demanded by Washington.

The Government of India is bracing for more “pressure“ from the U.S. on Iran sanctions in the coming weeks, but hopes that there may be an exception made for its dealings on the Chabahar port, as officials meet with a U.S. delegation in the next few weeks. However, sources said the government was yet to take any decision on cutting oil import from Iran, as the U.S. had demanded, when its U.N. envoy Nikki Haley visited India last week.

“We heard very clearly what Nikki Haley said and we are in no doubt the U.S. will use pressure, not just on us around the world. Question is what do we see as our national interest and how we respond to [the pressure], and how do we make our case to the U.S.,” a source said, adding that U.S. officials have given “informal indications” that they understood India’s reasoning for progressing on its Chabahar port and railway project.

According to the source, Iran remains an “important near neighbour” for India, and a major oil supplier, and the government hoped to have further discussions with the U.S. to understand the options it has on dealing with Tehran, given the sanctions proposed to kick in by November 4, 2017.

Iran, major oil supplier

India is second only to China when it comes to oil import from Iran, and in February 2018, after President Rouhani’s meeting with Prime Minister Narendra Modi in Delhi, India had committed to increase that intake by 25% this year.

However the U.S.’ decision to walk out of the multilateral nuclear agreement with Iran and re-imposition of sanctions by November has cast a shadow on its future engagement. This week the U.S. State Department reiterated its intention to get tough with all countries engaging with Iran for trade, energy and infrastructure projects.

“We are not looking to grant licenses or waivers, because doing so would substantially reduce pressure on Iran and this is a campaign of imposing pressure on Iran. ...We are prepared to work with countries that are reducing their imports on a case-by-case basis, but as with our other sanctions, we are not looking to grant waivers or licenses,” said Brian Hook, Director of Policy Planning at the State Department, on July 2, when asked specifically about concessions for India.

“2+2” meeting

The discussion on Iran sanctions, as well as on impending sanctions under the new American CAATSA law that imposes strictures on trade with Russian and Iranian entities, were expected to have been taken up during the “2+2” meeting between External Affairs Minister Sushma Swaraj, Defence Minister Nirmala Sitharaman and their counterparts in Washington this week, but the talks were cancelled by the U.S., owing to another meeting in North Korea for nuclear talks.

Government officials called speculation over the cancellation “unfounded”. They said the two sides were working to reschedule the “2+2” engagement soon. “Secretary Pompeo shared the reason with Ms. Swaraj, and we understand that he needed to be in Pyongyang which is priority number one for the U.S. at present,” a source said, but clarified that no date for the “2+2” engagement has been set as yet.