India, Iran agree to set up payment mechanism for bilateral trade

New Delhi: India and Iran have agreed to set up a payment mechanism to facilitate bilateral trade between the two countries. [caption id=“attachment_100436” align=“alignleft” width=“380” caption=“Earlier, Iran had threatened to stop crude oil supplies to India if a mechanism to pay for imports is not found quickly. Reuters”]  [/caption] “Both sides agreed on the mechanism to be put in place for the purpose, including for the payment to Indian exporters and project exporters,” a Finance Ministry statement said. The statement was issued following a meeting between the Department of Economic Affairs (DEA) Secretary R Gopalan with Iranian delegation led by Vice Governor of Central Bank of Iran Seyed Kamal Seyed Ali. “Both sides agreed to continue their engagement in the matter,” it added. The problem over payment to Iran arose after the Reserve Bank on 23 December last year scrapped the Asian Clearing Union (ACU), winning appreciation from the US, which is using sanctions to force Tehran to halt its nuclear programme. Earlier, Iran had threatened to stop crude oil supplies to India if a mechanism to pay for imports is not found quickly. Iran is second only to Saudi Arabia as an oil supplier to India, while India is Iran’s second-biggest crude buyer after China, accounting for about 20% of its exports. Iran supplies 12% of total oil needs of India. Indian firms have been struggling to pay Tehran because of international sanctions imposed over Iran’s controversial nuclear programme. The sanctions include banking restrictions. PTI