Turkish Weekly reported that India has begun using its currency to purchase Iranian oil. The move is part of New Delhi's effort to bolster exports to the Middle Eastern nation.

After tightening US sanctions made it difficult for New Delhi to pay Iran for oil in dollars, Tehran agreed to accept nearly half the payment in Indian rupees. The arrangement became operational recently.

Mr Rafique Ahmed with the Federation of Export Organizations of India said that it will give a major boost to trade between the two countries as Tehran will have to use the rupees it earns from Indian oil companies to buy goods from New Delhi.

Mr Ahmed said that “The oil companies have started to put the money in the rupee account and the flow of trade has started. They have deposited about USD 550 million. They are expecting more flow of money to come in.”

Iran has been scouting for goods to buy with the Indian currency. In May an Iranian trade delegation visited New Delhi to identify potential imports.

Indian exports to Iran reached some USD 2.5 billion in 2010. But they will have to nearly double to about USD 5 billion if Tehran is to use up the rupees to be paid for the Iranian oil.

India has cut down on oil purchases from Iran following pressure from the United States but it still procures about 12% of its requirement from Tehran. India along with countries like China has said it will abide by United Nations sanctions and not follow those imposed by Western countries.

Source - Turkish Weekly

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