India’s trouble over the oil payments to Iran are unlikely to end soon. An inter-ministerial meeting on Thursday failed to thrash out a solution to the vexed issue.
A source from the State Bank of India, which had been involved in the payments through the German bank EIH, said no solution had been found yet. India wants a more neutral bank for payments to Iran and continued supply of oil from the country. Thursday’s meeting was attended by official from the finance, petroleum and external affairs ministries.
A government source told FE that Iran is not comfortable with any other currency except euro, dollar and Japanese yen. The official added that Iran is willing to consider Japanese Yen as the substitute for the euro which currently used. The source indicated that exploring a Japanese bank is a strong possibility. Foreign secretary Nirupama Rao is currently on an official visit to Tokyo where she is expected to discuss the issue with Japanese officials.
India and Iran have been negotiating for months on ways to resolve the payment deadlock on a long-term basis and salvage the trade, which is worth around $12 billion annually.
Under pressure from the West, Germany has stopped the route accepted by Iran and India for transferring funds through the EIH.
India has been looking for a way to transfer the money by getting around the global economic sanctions against Tehran. India started using the new payment route through EIH after the Reserve Bank of India in December forbade the government from using the Asian Clearing Union to handle the transactions with Iran.
Aligning its foreign trade policy to the UN sanctions, India has issued a notice on March 31, banning all trade in goods and technology with Iran which could help that country?s controversial nuclear programme.
India depends on Iran for about 15% of its crude oil imports. Iran is India?s second-biggest oil supplier after Saudi Arabia. India had imported 4,00,000 barrels per day (bpd) of oil from Iran in 2009-10 and about 1,78,000 bpd during April-September. India, Asia?s third-largest oil consumer, imports over two-thirds of its oil needs and depends heavily on volumes from the West Asia to power its economy.