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The Finance Ministry has not given up on a proposal to put in place a line of credit for Iran in Indian rupees.
This proposal has not gone off the radar and is very much under consideration of the Finance Ministry, official sources said.
An Exim Bank credit line in Indian rupees is being seen as a sustainable long-term strategy to build and sustain India’s exports to Iran.
There have been talks in Government circles over the issue of leveraging the existing rupee payment mechanism with UCO Bank to support Indian exports to Iran.
Iran too is not averse to utilising the credit line in Indian rupees.
The payment for import of crude oil is now being used to promote India’s exports by keeping crude oil payments in designated account in Indian rupees in UCO Bank.
Iran has a huge trade surplus with India. India’s annual crude oil import bill from Iran exceeded $10 billion in recent years.
This is even as the quantum of crude oil imports declined from 21.20 million tonnes in 2009-10 to 18.11 million tonnes in 2011-12. Crude oil imports from Iran are expected to be only around 12 million tonnes in the current fiscal.
India Inc has suggested that Government should look at providing interest on a line of credit that may be put in place for Iran. It has been pointed out that rupee balances kept in UCO Bank do not earn any interest. It has been suggested that a special rate of interest, say four per cent per annum, for the credit line could be considered.
Meanwhile, India and Iran are understood to have drawn up a transit pact to transport goods to Afghanistan, it is learnt.
This may prompt India to make some investments in port infrastructure (Chabahar) that would act as a hub and ensure a link for its goods to move into Afghanistan.
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