We have asked Iranian side to provide a clean channel that could be used for transferring funds to Iranian oil companies by the Indian oil importing entities. Our only concern is that the channel should not be under any sort of surveillance by any global or national agencies that could create similar problem at a later stage, said the official.
Iran has assured India that it will sort out issues pertaining to a new payments mechanism soon. The mechanism could involve settlement for the crude in euros or any other currency expect US dollar, the official said. He added there was no need for Indian oil companies who import crude to buy on the costlier spot market. Indian oil companies are facing problems in making payment for oil imports from Iran as RBI has banned Asian Clearing Union, including India and Iran. This has been done following pressure from the US. The US fears that payments made for oil imports to dubious entities could be used by Iran to strengthen its nuclear arsenal. The restriction leaves Indian oil companies seeking alternative fund transfer channel. In the interim, Iranian oil companies have not disrupted supplies and continue to exports oil to India on credit.
There is no issue of currency for such transfers. Apart from dollar any other currency can be used for making payments. But we need the channel, the finance ministry official said.
Meanwhile, the problem India is facing is unique as it has huge trade deficit with Iran. Other countries such as China, Korea and Japan have trade surplus with Iran and their export proceeds are used to settle bills for oil imports in their respective currencies.
Earlier this month, an Indian delegation went to Iran to discuss the matter with their Iranian counterparts. The talks between the central bankers of both countries failed to find a way that would enable India to continue oil imports from its second-largest supplier while boosting the transparency of deals as sought by the US.
Iran is Indias second biggest crude oil supplier after Saudi Arabia, accounting for about 13% of its crude imports.