India oil imports from Iran fall 27%

India's import of crude oil from Iran slid by 27 percent in the last financial year as United States and European sanctions made it harder to ship fuel from the Islamic republic, a report said Wednesday.

India imported 13.3 million tonnes of crude oil from Iran in the financial year ended March 31, down from 18.1 million tonnes shipped in the previous year, the Press Trust of India reported, quoting official sources.

The decline in Indian imports was sharper than for Iran's other two big buyers, China and South Korea, as New Delhi struggled with payment and insurance problems.

The US and EU have shut down use of their financial systems for payment for Iranian crude, in the hope of starving Tehran of cash and forcing it to give up its alleged nuclear weapons programme.

Iran says its nuclear programme is for civilian purposes.

India cannot deposit dollars or euros in any foreign bank for importing crude from Iran because of the sanctions, while insurance companies are refusing to cover refineries that use oil from the Persian Gulf nation.

Iran was India's second-biggest crude oil supplier after Saudi Arabia in 2010-11 but is now its sixth-largest, behind Saudi Arabia, Iraq, Venezuela, Kuwait and the United Arab Emirates, the news agency said.

India, which relies on imports for 79 percent of its oil needs, bought a total of 182.5 million tonnes of crude in 2012-13, up from 171.7 million tonnes in the previous year.

India, the world's fourth-largest oil importer, has been walking a diplomatic tightrope as it pursues good ties with Tehran, while deepening relations with the US.

Under the sanctions, Iranian crude customers such as India have been restricted to using their own currencies for purchases.

Importers are being compelled to keep the payments in escrow accounts that Iran can use only for locally sourced goods and services, in what amount to barter arrangements.