The PTI news story failed to say if Iran has agreed to accept rupees.
The Finance Ministry is putting together a note for the cabinet outlining what Iran could do with the rupees—and what it would be barred from doing. PTI said Iran could buy “non-strategic” Indian products like railway equipment and commodities and consumer goods. But it could not use the currency to invest in India by buying businesses or even purchasing shares on the stock market.
The Indians are fearful of foreigners coming in and buying up Indian businesses.
Earlier India had arranged to make payments through an Iranian bank in Hamburg, but the German government shut that down after loud complaints from France, Britain and the United States.
Then India looked into having Indian firms open accounts in Dubai banks that could transfer payments to Iran. PTI said the UAE government refused to route the money.
New Delhi also approached Turkey, which has recently been building up economic ties with Iran. But Turkey never even answered India’s enquiries, PTI said.
India buys about 12 percent of its crude oil from Iran, paying about $1 billion a month. In December, the Reserve Bank of India, India’s central bank, stopped making payments for fear of running afoul of American banking restrictions.
Iran has been providing crude on credit since December, and India got one payment of $2.1 billion through the German bank route before that was shut down. India now owes Iran about $2.5 billion.
Iran buys about $1 billion of Indian goods annually versus India buying $12 billion in oil from Iran. If Iran accepts rupees, it will have $11 billion of non-convertible currency on its hands. It seems unlikely that Iran could find that much worth buying in the Indian market, so Iran may refuse the rupee deal.
