...

India, Iran agree on payment mechanism for trade

Iran Materials 7 October 2011 11:19
Iran and India have agreed to set up a payment mechanism to facilitate bilateral trade which will be a breakthrough in resolving the India-Iran payment crisis for import and export of oil.
India, Iran agree on payment mechanism for trade

Azerbaijan, Baku, Oct. 7 /Trend/

Iran and India have agreed to set up a payment mechanism to facilitate bilateral trade which will be a breakthrough in resolving the India-Iran payment crisis for import and export of oil, The Hindu quoted the Finance Ministry statement.

According to the ministry, both sides agreed on the mechanism to be put in place for the purpose, including for the payment to Indian exporters and project exporters.

Although the statement did not indicate but this would also include payments made by India for buying Iranian crude oil.

The agreement follows a meeting between Department of Economic Affairs (DEA) Secretary R Gopalan with Iranian delegation led by Vice-Governor of Central Bank of Iran Seyed Kamal Seyed Ali. The Finance Ministry statement said both sides agreed to continue their engagement in the matter.

The tension between two countries for oil payment started in December 23 when India's Central Bank (Reserve Bank of India) placed restrictions on transactions with Iran through the Clearing House System (Asian Clearing Union) that Washington believes Tehran has been using to bypass international sanctions which were imposed halt the Iranian nuclear programme. The sanctions include banking restrictions.

India has agreed to stop paying for its Iranian oil imports via Germany since the German chancellor Angela Merkel had intervened by instructing Germany's central bank (Deutsche Bundesbank) to stop clearing payments from India headed to the bank, known as EIH, which is under U.S. but not EU sanctions.

Despite India's debt, Iran had continued to export 400,000 barrels of oil to India daily, worth $1 billion per month.

An interim solution was found in early September wherein Indian companies were to make payments through Turkey. The Indian companies such as Mangalore Refinery and Petrochemicals were to route euro payments to state-owned Turkiye Halk Bankasi (Halkbank) in Istanbul. The bank then transferred the money to the account of the National Iranian Oil Company.

Iran is the second-largest crude supplier to India after Saudi Arabia and accounts for about 14 percent of the country's oil import bill.

Edited by T.Konyayeva.

Tags:
Latest

Latest