INDIA EYES RUPEE PAYMENT FOR IRANIAN OIL

New Delhi, June 22: India is looking to revive a rupee trade mechanism to settle part of its oil payments to Iran, fearing foreign channels to pay Tehran might choke under pressure from US sanctions, two government sources said.

During a previous round of sanctions, India devised a barter- like scheme acceptable to Washington to allow it to make some oil payments to Tehran in rupees through a small state bank. Iran used the funds to import goods from India. “We are looking at reviving rupee mechanism ... we have to prepare ourselves,” one of the sources told Reuters, adding that the current payment mechanism might not work.

A commerce ministry official said RBI had yet to decide on moving back to the rupee payment mechanism. In May, Donald Trump withdrew from a 2015 nuclear accord with Iran and ordered the reimposition of sanctions. Some sanctions take effect from August 6 while those, notably affecting the oil sector, will be effective from Nov. 4.