November 15-2013
The Indian government appears to be trying to develop India as a base that Iran can use to get around sanctions.
Because of banking restrictions on Iran, India pays for its oil imports from Iran into bank accounts in India that can only be used to buy Indian goods. But Iran doesn’t buy much from India and the cash piles up.
In the past, Indian government rules meant Iran could only buy Indian-made goods. But the Indian government has now changed the rules so Iran can buy anything, effectively allowing it to import products from elsewhere and ship them to Iran through India.
Exporters who import goods and ship them to Iran are no longer required to produce a “Goods of Indian Origin” certificate before receiving rupee payments, the Commerce Ministry decided last week.
The ministry has directed UCO Bank, which holds the Iranian rupee account, to cease insisting on the “Goods of Indian Origin” certificate.
In June, India had allowed export of imported products to Iran under the rupee payment mechanism provided 15 percent of value was added in India. Not even that is required any longer. Indian exports to Iran rose 39 percent to $3.36 billion in 2012-13 from $2.41 billion in 2011-12. But that still does not come close to using up all the funds piling up in Iran’s accounts in India.
Iran agreed in July under the Ahmadi-nejad Administration to take payments for oil it sells to India entirely in rupees after US and western sanctions blocked all other payment routes. _
But the Rohani Administration canceled that and reverted to the old system of taking only 45 percent of the payments in rupees.