Industry chamber Assocham on Friday called for resolving the payment impasse between India and Iran to spur bilateral trade, which has stood still for some months after the RBI directive that settlements be done outside the Asian Clearing Union (ACU) mechanism.
On December 23, RBI said that oil and other import payments to Iran will have to be settled outside ACU, which involves the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.
“Restoration of the ACU mechanism could be done or we can consider doing import-export transactions in UAE dirhams,” Chairman of Assocham International Committee Mr Anil Agarwal said in a statement.
Assocham has written to Finance Minister Mr Pranab Mukherjee, Foreign Minister Mr S M Krishna and Petroleum Minister Mr Jaipal Reddy on the issue, saying, “We strongly recommend that this impasse of payment mechanism be sorted out as the trade between the two nations has come to a standstill.”
Till 2008, payments to Iran under ACU were done in US dollar, but after America imposed sanctions against it for suspected nuclear weapons programme, the currency was switched to the euro.
Assocham has said that as a result of the sanctions, most permitted currencies like dollar and euro are not allowed for any trade transactions with the Islamic nation.
ACU, based in the Iranian capital of Tehran, settles trade transactions between these countries. Under the mechanism, imports by the nine nations are settled every two-months, with every member paying for imports after netting out its exports among the union.
The chamber said, the trade between the two countries is expected to touch $ 30 billion by 2015. During 2009-10, it was $ 13.39 billion.
After the scrapping of the ACU, Iran, which makes up for over 12 per cent of India’s oil needs, has continued to supply oil on credit and the outstanding dues have run into a staggering $ 4 billion.