Iran has offered to meet India’s energy demand at a time when global crude oil prices are at multi-year highs, threatening to push inflation, widening trade deficits that New Delhi runs with foreign countries and weakening the rupee against the dollar.
Iranian ambassador to India Ali Chegeni has offered to relaunch the rupee-rial trade mechanism for the export oil & gas to India. He added that bilateral trade has the potential to cross $30 billion if the two sides can revive the rupee-rial trade. Prior to US sanctions, Iran and India ran a barter system wherein Indian oil companies would pay in rupees to local Iranian banks, which in turn used the currency to pay for imports from India. The mechanism led to a proliferation of oil trade between the two countries to the extent that Iran replaced Saudi Arabia as India’s largest oil supplier.
Iran was India’s second-largest oil supplier but New Delhi had to halt imports after Donald Trump’s United States backed out of the nuclear deal with Tehran and re-imposed sanctions on Iranian oil. After American sanctions, trade between India and Tehran plunged from $17 billion in FY19, to less than $2 billion in April-January of the current fiscal.
“Iran is ready to meet India’s energy security needs by launching rupee-rial trade for export of oil and gas,” Chegeni was quoted as saying in a statement issued by the MVIRDC World Trade Center, here over the weekend.
