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India and Iran agree to solve imbroglio over oil payment

BS Reporter  |  New Delhi 

India and Iran have agreed to put in place a mechanism to resolve the impasse over payment of oil imports from the Gulf nation and to Indian exporters.

An Iranian delegation met officials from various Indian ministries in the past two days to resolve the payment problems for imports of oil from the Gulf nation as well as some Indian exporters.

The delegation, led by by Central Bank of Iran Vice-governor Seyed Kamal Seyed Ali, held detailed and constructive discussions on the various options for resolving the issues, the finance ministry said today.

“Both sides agreed on the mechanism to be put in place for the purpose, including for the payment to Indian exporters and project exporters. Both sides agreed to continue their engagement in the matter,” it said in a statement here.

The Indian delegation was led by economic affairs secretary R Gopalan.

A Reserve Bank of India notification last year blocked trade-related payments as Indian authorities decided to keep transactions outside the Asian Clearing Union — an arrangement that allowed members such as India to do business with Iran that faces the United Nations and the United States sanctions.

Both the sides have engaged themselves in talks to settle the issue.

Earlier, alternative options of doing the payment were also mulled. Multiple currencies, including rupee, euro and yen, as well as payment on cargo-by-cargo basis were considered.

Iran, which imports 21 million tonne oil to India, is the second largest supplier of crude oil to India after Saudi Arabia. India is also its second largest customer.

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First Published: Thu, October 06 2011. 00:37 IST