On a brief visit to New Delhi, U.S. Ambassador to the United Nations Nikki Haley told India to rethink its relationship with Iran. “I think as a friend, India should also decide if this is a country they want to continue doing business with,” Ambassador Haley said in an interview with Indian news network NDTV.

The broadcaster NDTV reported Haley’s comments:

Nikki Haley, the US Ambassador to the United Nations, has told NDTV that India needs to “rethink its relationship with Iran” and she had a “constructive conversation” with Prime Minister Narendra Modi about cutting Iranian oil imports during their meeting on Wednesday.

“All of us have to rethink who we choose to do business with. I think as a friend, India should also decide if this is a country they want to continue doing business with. So yes, I had that conversation with PM Modi. It was a constructive conversation,” Ms Haley, who is on a two-day visit to India, told NDTV.

Haley’s statement comes shortly after President Donald Trump’s administration “postponed” a high-level dialogue with India, hinting differences between Washington and New Delhi. The meetings meant to strengthen defence and strategic cooperation were called off by the U.S. State Department for “unavoidable reasons,” official Indian sources confirmed. Indian Foreign Minister Sushma Swaraj and Defense Minister Nirmala Sitharaman were scheduled to fly to Washington next week to hold the talks.

The country’s leading newspaper Times of India explained the reasons behind the sudden move:

The United States on Wednesday abruptly scrapped much-anticipated high-level talks with India amid growing differences between the two countries (…).

US officials are said to have conveyed to their Indian counterparts that talks between the US Defense Secretary and Secretary of State and their Indian opposites, scheduled for July 6 in Washington, are being “postponed” due to “unavoidable reasons.” (…)

The postponement comes amid wide differences between Washington and New Delhi, including threat of sanctions against India on two fronts: If it goes ahead with the anticipated purchase of S-400 missile system from Russia, and if it does not end oil purchases from Iran.

Earlier this week, Indian newspaper Hindustan Times reported the earnestness with which the administration was pursuing the policy to isolate Iran:

The United States will insist India and all other buyers of Iranian crude must cut imports to “zero” by November 4 when sanctions go into effect against Iran, a senior state department official said on Tuesday and warned there will be no waivers, unlike the previous round.

The official said the message has been delivered already to allies in Europe and Asia and an interagency team of state and treasury department officials will be visiting India, China and other countries in the coming weeks.

The official, who spoke to reporters on background, said India and China “will be subject to the same sanctions that everybody else’s is… and yes, we will certainly be requesting that their oil imports go to zero, without question.”

The Trump administration has been urging the Modi government to cut oil imports from Iran or face sanctions. Indian Foreign Minister had recently announced that New Delhi would continue to buy Iranian oil, ignoring the U.S. sanctions on Tehran. Yet, the country is apparently taking steps in the right direction. As Times of India reported, “India braces for life without Iran oil”:

India appears to be bracing for life without Iranian oil and preparing Plan B after the US administration under President Donald Trump has declared zero tolerance against any country or entity that flouts its diktat to stop buying crude from Iran after November 4 + when the 180-day wind-down period ends.

Officially, India maintains it only recognizes UN sanctions + and will take up the issue with the US at appropriate fora. But the sound bytes emanating from Washington leave little doubt that India may have very little room for manoeuvre and may have to stop Iranian oil flowing onto its refineries.

Since 2008, Iran’s share of India’s imports dropped from 17 percent to less than 7 percent, Forbes magazine reported in a recent issue.

If India needs cheap oil to stay competitive in the global market, it also needs the U.S. to check China’s growing territorial ambitions. Last summer, India’s decades-old border tensions with China boiled over into military standoff along the Himalayan border, bringing the two nuclear powers closer to war.

India is alarmed by the US$60 billion China-Pakistan Economic Corridor, which gives Beijing access to the deep-sea port on the Arabian Sea. The Chinese People’s Liberation Army is already conducting joint military exercises with the Islamic Republic.

New Delhi seems to be taking the warnings seriously. Indian financial institutions are winding down financial operations with Iran, as several banks instructed corporate clients to “complete their financial transactions with Iran before sanctions take effect” in November, Forbes magazine reported.

The ball is now clearly in India’s court. As far as Trump administration is concerned: India can buy the cheap Iranian oil, but it will come at a price. This time New Delhi can’t hope to get sanctions waivers like the ones it got under the Obama or Bush administrations.

Bilateral trade between the U.S. and India was pegged around US$115 billion in 2016. The growing trade volumes have created a larger deficit as well. President Trump wants to narrow the US$31 billion deficit with New Delhi.

The administration also wants the country to lower trade barriers and cut tariffs. President Trump has vowed to scrap unfair trade arrangements tipped against U.S. manufacturers. “We are going to make trade fair and reciprocal,” he said at a recent really in North Dakota. “They do it to us, we do it to them.”

“The United States has one of the lowest tariff rates in the world. We have applied tariff rates of 3.4 per cent and India’s is 13.4 per cent. Over one half of tariff line items imported into our country are duty-free whereas less than 3 per cent of the goods coming into India qualify for duty-free status,” a senior U.S. diplomat told Indian business daily Economic Times.

Watch: Full interview given by Ambassador Haley to Indian news channel NDTV

[Cover image via YouTube]