NEW DELHI, Feb. 7 (UPI) -- Iran, facing tough U.S. and European sanctions, reached a deal with India to accept 45 percent of payment for its oil in Indian currency, its ambassador said.
Speaking to reporters in New Delhi, Iranian Ambassador Syed Mahdi Nabizadeh ruled out any cuts in his country's crude supplies to India. He said the new payment arrangement, designed to reduce the impact of the sanctions over Iran's nuclear program, would be agreeable to both sides.
India, whose energy needs are rising to meet its economic growth, relies mostly on imports to meet its oil requirements and more than 10 percent of those imports come from Iran. Thus, India also cannot cut its Iranian imports to any substantially degree without affecting its growth, its leaders have said.
To reduce the impact of the Western sanctions, Iran will accept 45 percent of the payment for its oil in Indian rupees.
Iran can use those rupees to buy Indian imports such as machinery, metal products, iron, steel, minerals, clothes, fiber, sugar, tea, wood and automobile spare parts, The Hindu reported.
"Fortunately, a suitable mechanism has been found by the two countries. Officials of both countries met last week and both the Central Bank of Iran and the Reserve Bank of India are happy with this arrangement," the ambassador was quoted as saying.
The Hindu report said the rupee payment would be routed through three Indian banks. Indian companies can also invest in Iranian projects such as developing oil and gas fields, extraction of iron ore and building roads and railways.
The Iranian envoy was quoted as saying the feeling in his country was to continue supplying India with about $1 billion of crude.
He also said Iran could extend the one-month deadline given to India on signing contracts for developing a gas field discovered in the Persian Gulf in 2006.
