India has reportedly handed Iran a tax break worth hundreds of millions of dollars, effectively welcoming a crude oil import deal which has been plagued by, what critics describe as unilateral and illogical American sanctions.
India, one of among eight nations spared from those sanctions for six months, has moved to pay for the oil in its currency, rupee since the main banking channels dealing with global currencies are blocked by Washington’s measures.
The $1.5 billion crude oil deal was signed on November 2 between India’s finance ministry and the National Iranian Oil Company (NIOC), Reuters reported Monday, citing a government order.
Such a payment to a foreign company operating in India would have normally been subject to a tax of 42.5 percent, or $637.5 million — a deal-breaker for the Iranians — according to the report.
“In the previous round of sanctions Iran was allowed to use funds for imports from India but this time we have expanded the scope for use of funds to benefit both nations,” an unnamed Indian government official was quoted by Reuters as saying.
In November, US President Donald Trump’s administration reinstated all of Washington’s sanctions on Iran that had been lifted under the 2015 nuclear deal. The sanctions were the second batch that the Trump administration has reimposed on the Islamic Republic since it withdrew from the nuclear agreement last year.
The rollback ended US participation in the Obama-era accord, which now hangs in the balance as Iran no longer enjoys the billions of dollars in sanctions relief it was granted under the deal in exchange for curbs on its nuclear program.
Iran is already in the grip of an economic crisis. Its rial currency has plummeted and oil exports have steeply fallen, though India and China have continued to purchase it. Most Europeans, as well as Japan and South Korea, have stopped buying Iranian oil.