Reuters reported that India is now paying Iran only in rupees for its oil after it lost another payment route in euros due to tougher sanctions from February 6.
Sources at local refiners said that the rupee is only partly convertible, limiting its international acceptability although Iran can use the currency to buy non sanctioned goods and services from India.
Turkey's Halkbank had been handling payments for Iranian oil in euros from India since July 2011 after other conduits were choked by earlier sanctions but the latest US measures effectively prevent this.
India had been paying through Halkbank for about 45% of its massive Iranian oil bill since April 2012 with the rest in rupees. The two nations had been trying to find goods for Iran to buy from India to smooth a huge trade imbalance.
India's total exports to Iran in April to September 2012 amounted to USD 1.4 billion, a quarter of the value of its imports from Iran during the period, according to Indian government data.
There have been several visits by trade delegations to try to boost exports from India, especially of foodstuffs which are not prohibited under sanctions. Iran has bought sugar from India but attempts to sell wheat to Tehran have faced quality issues. The two sides have yet to find another way to settle their oil trade and Indian refiners are currently retaining 55% of their payments to Tehran.
HPCL Mittal Energy Limited part owned by steel tycoon Lakshmi Mittal may now be able to clear its dues in rupees, built up after India said it could only pay 45% in rupees and Halkbank refused to open a euro account for the private refiner. HMEL bought a total 4 million barrels of oil from Iran between September and October 2012.
