India is expected to fall back to the rupee payment mechanism for crude supplies from Iran, in order to counter the threat of sanctions from the United States, reports said.
New Delhi is expected to announce the payment option over the next few days, Indian media reported on Saturday.
“We are keeping all options open given the challenges we may face during the sanctions,” said a government official.
This is necessary as the US sanctions would close the dollar payment gateway for trade transactions and unless there is an alternative payment mode, import of crude oil would become difficult.
India depends on Iran for nearly 10 percent of its crude oil requirements and unless some payment options are worked out supplies will dry off.
India had used UCO Bank to fight payment restrictions during the previous sanctions regime against Iran (2012-2015). India then made payments to Iran for crude oil in rupee through UCO Bank. Iran, in return, used the money to pay for other imports from India.
India then used a Turkish bank to pay Iran for crude oil in 2013, but later turned to rupee payments for almost 50 percent of the oil imported from Iran and kept the remaining pending till opening of payment routes.
When restrictions were eased following the 2015 nuclear deal between Tehran and world powers, India started clearing the dues.