India likely to pay interest to Iran on accumulated oil dues to compensate for the loss incurred due to foreign exchange volatility.





India owes $6.5 billion to�Iran as�accumulated dues for�oil imports. Since Iran is incurring a loss if India pays the dues in�sync with�the then foreign exchange rates, Iran has sought compensation in�terms of�interest payments, to�which India has agreed.

Sources from�the Ministry of�Petroleum & Natural Gas told Sputnik, �Iran seeks some relief from�losses incurred due to�foreign exchange volatility. India has agreed to�compensate with�interest on�the accumulated amount, but�the rate at�which dues can be paid is under�discussion.�

The issue is likely to�be sorted out�before Indian Prime Minister Narendra Modi's upcoming visit to�Iran. Iranian Central Bank Governor is likely to�visit New Delhi to�finalize the moralities of�payment. Nevertheless, Iran has made it clear that they are not in�hurry to�collect the dues.

It is understood that Iran raised this issue during�Minister of�Petroleum & Natural Gas Dharmendra Pradhan's meeting with�Iranian Central Bank Governor Valiollah Seif in�Tehran. Iran has sought interest on�accumulated dues and wants India to�pay in�euros.
Since 2013, Indian refiners were paying 45% of�the import bill in�Indian rupees and the remaining 55% had been accumulating, pending finalization of�a payment mechanism. With the lifting of�western sanctions, Iran reconnected to�the SWIFT international payment system, paving the way for�receiving the $6.5 billion of�blocked oil payments from�India.


Belgium-based SWIFT, which provides banks with�a system for�moving funds around�the world, recently allowed Iran to�use its network for�money transfers.


Meanwhile, Indian traders are now expecting to�encash the goodwill India generated while dealing with�Iran during�the sanction period. They are pushing the government to�resolve all potential hurdles that may obstruct future trade with�Iran. They want the Reserve Bank of�India to�soon finalize a payment mechanism through�which they can collect their dues from�Iran.
President of�the Federation of�Indian Exporters Organization S C Ralhan says, �Many of�the exporters received payment in�US dollars for�exports to�Iran which has not been materialized as�RBI is yet to�issue instructions for�settlement of�trade transactions subsequent to�restoration of�SWIFT. RBI has suggested to�route them through�the rupee payment mechanism. The delay is costing Indian exporters, and in�a few cases, the payment in�foreign exchange has to�be remitted back in�view of�the absence of�guidelines by�RBI.�


The bilateral trade between�India and Iran during�the fiscal year 2014-15 was over $13 billion. India imported $8.95 billion worth of�goods, mainly rude oil and exported commodities worth $4.17 billion.

By Sputnik