Iran to pay in Indian rupee for imports

Iran to pay in Indian rupee for imports

NEW DELHI: Indian exporters will be able to receive payments in the restricted rupee currency for sales to Iran within two weeks, the chief of India's top exporters' body said yesterday, as New Delhi puts a mechanism in place to maintain trade despite US sanctions.

About $3 billion in Iranian import arrears have accumulated since December 2010, Federation of Indian Export Organisations president M Rafeeque Ahmed said, when a previous payment conduit was closed under pressure from Washington, which is using sanctions to try to stop Tehran's suspected nuclear programme.

"The government has told us the mechanism for payment in rupee (to Indian exporters) will be in place in two weeks," Ahmed said.

"Between December 2010 and January 2012 we have sent goods worth about $3bn and almost all of it is stuck."

Ahmed is taking part in government negotiations to find a solution to the payment problems that have hit trade between the two countries after US sanctions on dollar deals. His organisation is a quasi-government body set up by the trade ministry.

Indian oil importers have been paying for around $11bn a year of crude since the middle of 2011 through Turkey's Halkbank, but this route would have been expensive for Iranian importers given sharp falls in the rial.

India was Tehran's second-biggest crude customer last year after China and Iranian oil accounts for about 12 per cent of its needs.

Most of the Iranian arrears are for imports of iron and steel ($623m), chemicals ($453m) and cereals ($419m), machinery ($143m) and pharmaceuticals ($87m), Ahmed said.

Indian rice suppliers have also reported defaults by Iranian buyers and have said they are owed at least $144m.

With payments for oil through Halkbank now looking vulnerable to fresh sanctions, India and Iran have agreed to settle 45pc of this trade in rupees and boost exports to narrow their trade gap.