A deadlock between India and Iran over the payment mechanism for crude supplies is likely to be resolved soon, with the Indian government expressing willingness to make payments in any convertible currency other than the dollar.
“We have asked Iran to work out how they will receive payments on the last leg for exporting crude to India. We are willing for any convertible currency other than the dollar. It is now for Iran to decide,” said a finance ministry official, adding even euro was not a problem.
He said the issue would be resolved much earlier than March.
Last month, the Reserve Bank of India had directed that imports of oil and gas from Iran should be settled outside the Asian Clearing Union, a regional payment mechanism between nine nations, including India and Iran. Under this, payments can be made either in dollar or euro. Iran had earlier insisted it would not trade outside the ACU mechanism.
The settlement in currencies other than dollar or euro, though technically possible, is not a preferred route, since reserves of dollar and euro are higher than other currencies.
Iran, which exports 21 million tonnes oil to India in a year, is the second-largest supplier here after Saudi Arabia.
ACU, headquartered in Tehran, was established following an initiative from the United Nations Economic and Social Commission for Asia and the Pacific, for promoting regional cooperation. The main objectives of a clearing union was to facilitate payments among member-countries for eligible transactions on a multilateral basis, thereby economising on the use of foreign exchange reserves and transfer costs, as well as promoting trade among the participating countries. The idea was to prevent weakening of the local currencies.
