India won't cut oil imports from Iran

Amid growing tensions over impending sanctions by the United States and others on Iran, India is considering various payment options, including in rupee, for its oil imports from Tehran.

“Oil imports are continuing and we are in a position to pay. There are different options that are being discussed. Rupee is one of the options to pay,” H R Khan, Deputy Governor, Reserve Bank of India, told reporters here.

He, however, said there were certain bilateral arrangements, which could not be discussed at this juncture. Euro was another option to pay for Iranian oil, he said.

While the US has enacted a law for sanctions against Iran and all those dealing with the nation, the European Union has deferred a similar decision by six months as some of the debt-ridden states objected to it.

The EU, as a bloc, is Iran’s second largest customer. India, the world’s fourth-largest oil consumer and Iran’s second-biggest individual client after China, imports close to a third of its oil from Iran and is looking at ways to tide over a shortage in the supply in the coming months. Pranab Mukherjee has made it clear in the US that cutting oil imports from Iran would not be easy.

Payment mode

India routes payments in euros to Iran for its crude oil supplies through Halkbank. The bank has so far not declined to be an intermediary, but has apparently said it would not like to open new accounts.

Official sources said among the mechanisms being explored is a rupee-rial barter which will allow India to trade directly with Iran.