In a bid to settle the currency payment issue, secretary of department of economic affairs (DEA) R Gopalan met officials from Iran and Reserve bank of India. The meeting was also attended by Iranian Ambassador to India Seyed Mahdi Nabizadeh. Another meeting is scheduled for tuesday to resolve the issue.
Iran is the second largest supplier to India after Saudi Arabia. Sources have said that India is mulling using multiple currencies, including the rupee, to pay for crude oil imported from Iran. Besides the rupee, the euro may also be used to pay for a part of the payment. India import 12 million barrels of oil from Iran every month. Some payments are expected to be routed through countries like Turkey.
The dispute arose after RBI in December, 2010 refused to clear the payment through the Asian Clearing Union (ACU) mechanism for paying for Iranian crude oil imports.
Working out a temporary mechanism, India had in February started making euro payments through an Iranian bank based in Germany. But under US pressure, Germany soon stopped accepting money from India for onward transfer to Hamburg-based EIH Bank. EIH bank was reported to be partially owned by an Iranian company, hence, not considered neutral.
Sources said, an alternate mechanisms like paying through Dubai or Turkey-based banks were also being explored.
A finance ministry official told FE that a delegation is scheduled to visit India from Iran in June. The delegation is expected to discuss issues regarding oil payment and its bilateral trade with India. Apart from oil payment, sources have said, India is also facing a dispute with Iran for payment on basmati rice. India exported more than Rs 4000 crore worth of basmati or aromatic rice to Iran during 2009-10. However due to US and EU sanctions the outstanding dues settlement has slowed down.
Besides oil, India imports items such as nuclear reactors, furniture, nuts, cocoa products, salt, ores, ceramic items, and organic chemicals. India mainly exports tea, coffee, meat products, pharmaceuticals, tobacco items, silk, carpets, aircraft, spacecraft, iron and steel, footwear and fertiliser to Iran.
Total export to Iran in 2009-10 was $178,751.4 million, while import was $288,372.9 million.