India to Import Iranian Oil Using Rupee Payment Mechanism : India will import crude oil from Iran using a rupee-based payment mechanism, an industry source involved in discussions told Reuters on Thursday, adding that 50 percent of those payments will be used for exporting items to Tehran.

India’s state-owned UCO Bank is expected to announce the payment mechanism in the next 10 days, the source said.
“An agreement had been signed by the Indian and Iranian government on Nov. 2 2018 for oil payment in rupees and 50 percent of those funds had been earmarked for exports,” according to an Indian government document reviewed by Reuters.

Russian and Chinese shipping companies were pitching to facilitate India-Iran trade, the source said. Under U.S. sanctions, India will be allowed to export farm commodities, food, medicines, and medical devices to Iran.

However, items such as petroleum and petrochemical products, automobiles, steel, precious metals and graphite are not allowed to be exported to Tehran.Oil payments are being made in rupees only as against earlier arrangements where there was a ratio of 45 percent rupees and 55 percent euros, the document said. Source: Reuters

The Indian government has not asked its refiners to cut Iranian oil imports, but some firms have started reducing purchases from Tehran. “So far we don’t know what we are expected to do. We have not asked refiners to cut imports,” the source said, adding that an official meeting between India and the United States to discuss Iran sanctions had not yet taken place.

An Indian delegation visited officials and bankers in France, Germany, Britain and Brussels, the base for the European Union, to find alternative payment routes, the source said, adding that it would be “almost impossible to use European banks for payment to Iran”. Restarting the rupee payment mechanism would help fix a trade balance that favors Iran.