Oil sale in rupees puts Iran in dependent on India position
Azerbaijan, Baku, Feb. 14 / Trend T.Jafarov /
Sale of oil in rupees puts Iran in dependent on India position, Mehrdad Emadi, an advisor to the European Union, told Trend on Tuesday.
"In case Iran sells oil in India in rupees, with the increase in Iranian funds in Indian banks, Iran will turn into an "economic hostage" of India, and become dependent on this country," he said.
The Central Bank of India in order to create conditions for the implementation of trade exchange between Iran and India allowed one of the private banks of Iran to open an account in rupees in the State Bank of India UCO and exercise activities. Some 20-25 percent of the funds received from Iran's oil exports to India, will be entered in this account in the Indian Bank. Thus, the Indian exporters will be able to receive in this bank money for the goods exported to Iran.
Mr Emadi believes it is possible both to win and lose by implementing this project.
"Unfortunately, the winning side in this matter will be India and Iran will be a loser. India, saying is risks in this sale with Iran, can set conditions on the expense of Iranian money for any sphere," he noted.
He said because of the lack of Iran's opportunities to buy anything in the rupees in the world market, most of rupees from the sale of oil will remain in Iran.
Eight months ago India announced to Iran that in case of opening an account in rupees, India's central bank will not give a guarantee on the exchange rate. If Iran wants to exchange the rupees into another currency, the price of rupees will be lower and it will damage Iran. If Iran wants to use them, it is necessary that India imports its goods to Iran, which would harm domestic producers. Iran's imports will increase and industrial production will decrease.
Trade turnover between Iran and India amounted to $13.67 billion in 2011. Some $2.72 billion of this amount were imported to Iran. In trade balance of the both countries $11 billion of export goods fall to Iran.
Mr Emadi believes payment of sold oil in rupees will also affect financing of different projects within Iran.
First of all, Iran will lower its capability to buy foreign currency from other countries. Over the past 17 months, India was the third country in terms of purchases of Iranian oil. As a result of payment of sold oil in rupees Iran will lose the source of oil sales, because the money received from the oil sale before were used for financing domestic projects," Mr Emadi said.
According to foreign mass media, oil imports from Iran to India grew by 37 percent and reached 550 thousand barrels per day compared to last year. Overall, India imports 12 per cent of consumed oil from Iran.