Indian and Iranian governments have worked out Rupee trade mechanism for payment of India's total crude imports from the latter in Rupees rather than convertible currency - the US Dollar normally used for such trade globally, The Time of India reported.
The new mechanism is expected to be operational in two months. This arrangement comes in wake of American and European anti-nuclear sanctions that are increasingly disrupting Iran's economy.
Anup K Pujari, Director General of Foreign Trade interacting with reporters on the sidelines of Karnataka: Export Vision 2020, exporters' convention organised by Federation of Indian Export Organisations (Southern region) here on Monday that a decision to denominate our trade in rupee terms was taken at a bilateral meeting of two countries as trade cannot be done using international currency. "It is not barter, but it is almost like barter," he said.
Explaining the mechanism worked out, Anup Pujari said whatever oil India imports from Iran and for that oil whatever money India is supposed to pay, part of that amount will be retained in a bank in India. Thereafter, any Indian who exports to Iran need not have to bother about some US bank. Once (export) documents are negotiated, the designated Indian Bank, where the money will be kept, will pay the exporter the equivalent amount in Indian currency.
Noting that Iranian government for a long time was not allowing import of items from India, Anup said the foreign delegation that India mounts will have the opportunity to sell rice, cashew, carpets and whole range of items that do not fall under the purview of the sanctions. "Since we have to anyway import oil from Iran," Anup said, exports to that nation will ensure that 25% of that bill (kept in Indian bank) will anyhow be negotiated.
For 2010-11, India's total trade with Iran was equal to $13.67 billion, which included imports worth $10.92 billion and exports worth $2.74 billion. The balance of trade is in favour of Iran and the total growth witnessed during the year was around 2.07 per cent, according to the India's ministry of commerce and industry data. India's exports to Iran include petroleum products, rice, machinery and instruments, manufactures of metals, and other items.