Following the US waiver to India to import a restricted quantity of crude oil from Iran for the next six months, the Persian Gulf nation has signed a memorandum of understanding with India to accept payments in rupee.
Domestic refiners will pay Iran through a UCO Bank account of the National Iranian Oil Co, according to sources. The money deposited in this account will be used by Iran to pay for imports from India as even during the sanctions— which kicked in on November 5 — New Delhi can supply medicines, medical devices and foodgrains to Tehran.
India has a goods trade deficit of over $8 billion with Iran, mostly due to massive oil imports. Farm commodities make up for a half of India’s $2.6 billion in goods exports to Iran. In fact, at $900 million, basmati rice alone accounted for over a third of India’s total exports to Iran in 2017-18, payments for which were made mostly in euros. Payment for crude oil was made to Iran using European banking channels which got blocked from November.