New Delhi: In a breakthrough, India has signed an agreement with Iran to pay for crude oil imports in rupees, industry sources said on Thursday. On Tuesday, India had signed a currency pact with the UAE that allows both countries to conduct trade in their own currencies eliminating a benchmark currency like the US dollar.
According to sources, Indian refiners will make rupee payments in a UCO Bank account of the National Iranian Oil Co (NIOC). Around 50 per cent of these funds would be used for exporting items to Tehran. Asked why only 50 per cent had been earmarked for exports, industry sources said, “It will be difficult for India to export items for even 50 per cent of the funds.”
Under US sanctions, India will be allowed to export farm commodities, food, medicines, and medical devices to Iran. However, items such as petroleum and petrochemical products, automobiles, steel, precious metals and graphite are not allowed to be exported to Tehran.
Oil payments are being made in rupees only as against earlier arrangements where there was a ratio of 45 per cent rupees and 55 per cent euros, said sources.
India’s UCO Bank is expected to announce the payment mechanism in the next 10 days. The MoU was signed following the US letting India and seven other nations to keep buying Iranian oil despite sanctions were reimposed on Nov. 5.
Russian and Chinese shipping companies were pitching to facilitate India-Iran trade. FIEO president Ganesh Kumar Gupta said on Thursday that India’s exports to Iran grew by about 22 per cent in first six months of 2018-19. However, the imposition of sanction has definitely impacted India’s exports as three months window provided by the US got over in August, 2018, he said.
Mr Gupta said that in past six months, India has shown good growth in export of cereals, meat, paper, pharmaceuticals, made-ups, auto-components, electrical machinery and equipment, glass and glassware among others. However, exports of iron and steel, article of iron and steel, copper, plastic and plastic products, essential oils, inorganic chemicals, man-made staple fibre, apparels suffered during the first six months of the fiscal. “We have been given to understand that UCO bank is working on necessary modalities to start the rupee payment. This should apply to all exports except those in OFAC list,” said Mr Gupta.
