Imports from Iran cut drastically.

India has drastically reduced its import dependence on Iran in 2011-12 despite the government maintaining that the country is under no pressure from the US to cut its imports from the country.

Import numbers available on the commerce ministry website shows that Iran has slipped from the No 8 position to No 14 between April-January 2011-12, while Iraq has come in at No 6 slot among the 10 largest exporting countries to India.

Much of the reduction in imports from Iran is on account of oil that seems to have been offset by imports from Iraq. Eighty per cent of Indian imports from Iran comprises crude oil, followed by small quantities of organic and inorganic chemicals, fertilisers and edible fruits and nuts that together constitute the remaining 20 per cent.

Iran’s contribution to India’s overall import basket has also come down from 2.96 per cent in 2010-11 to 2.4 per cent in the first 10 months of the last financial year, while Iraq’s share has gone up from 2.4 per cent in 2010-11 to 4.1 per cent in 2011-12.

In the period under review (April-January 2011-12), total imports from Iran were valued at $9.8 billion compared with $9.04 billion in the year-ago period, indicating growth of only 8.4 per cent in dollar value. Imports from Iraq, however, went up by 137 per cent in this period at $16.3 billion against $6.9 billion in the corresponding period in 2010-11. Even India’s overall imports grew 32.7 per cent in April-January 2011-12 at $401.6 billion compared with $302.5 billion.

Mangalore Refinery and Petrochmicals, India’s largest buyer of Iranian crude oil, also cut sourcing from Iran to 6.2 million tonne in 2011-12 from 7.3 million tonne in 2010-11, ostensibly under threat of US retaliation. “There has been tremendous pressure to cut dependence on Iran after which getting insurance for Iranian crude ships also became difficult. Amidst all this, we have intentionally reduced our exposure to Iran last year, and going forward, it will further come down to just five million tonne in 2012-12,” a senior official of MRPL told Financial Chronicle.

Throughout 2011-12, commerce ministry had maintained that governm-ent would go by UN resolut-ions and the country was under no pressure to cut oil imports from Iran with two nations sharing strong trade ties. Analysts tracking the sector feel the payment crisis that emerged in late 2010 also played against Iran, which had so far been Ind-ia’s second largest crude supplier behind Saudi Arabia, contributing to nearly 12 per cent of total demand.

“Though Iran is commercially more economical for India to source crude, yet Indian companies started cutting down on oil imports from there after the payments crisis emerged. This was followed by stricter US sanctions on Iran which compelled Indian buyers to announce further cuts in 2012-13 to show the world community that India was reacting to US pressures,” Arvind Mahajan, partner and head of energy at KPMG said.

Source : mydigitalfc.com