The Directorate General of Foreign Trade (DGFT) in a notification said, “The prohibition on direct or indirect export to Iran or import from Iran of specified items is lifted.
“Direct or indirect export to Iran or import to Iran is now permitted subject to UN Security Council Resolution 2231 (2015) and IAEA specified documents.” The bilateral trade between India and Iran stood at $ 9 billion in 2015-16 as against $ 13.13 billion in the previous fiscal.
India is heavily dependent on oil imports from Iran. Moreover, Essar Oil has paid $ 500 million to Iran via a new payment channel opened recently to clear one-fifth of its outstanding. Indian refiners are using Germany-based EIH bank to help clear past oil dues to Iran.
Industry sources said Essar Oil, which owed about $ 2.6 billion in past dues, paid $ 500 million. Mangalore Refinery and Petrochemicals Ltd (MRPL) and Indian Oil Corp (IOC) have paid over $ 1 billion. Sources said MRPL, which owed Iran $ 2.6 billion before the payments started last month, paid $ 300 million this month on top of $ 500 million it paid in May.
IOC cleared another $ 30 million over and above the $ 250 million it paid last month. The company owed $ 560 million before the payment cycle started. Hindustan Petroleum (HPCL) had paid $ 17.5 million out of its outstanding $ 23 million. Its joint venture with Mittal Energy - HMEL - owes another $ 60 million.
Sources said the payments last month were routed through Union Bank of India, which in turn transmitted the money to National Iranian Oil Co (NIOC) through HalkBank of Turkey. This month, the refiners are using State Bank of India (SBI), which transfers the euro to NIOC through EIH.
The balance dues will be cleared in 2-3 months, they said, adding that the oil companies have been advised to buy foreign currency in a calibrated manner to avoid a run on the rupee.
The payments made in May and this month are the first by Indian refiners in a foreign currency since lifting of sanctions against Iran in January this year. RBI is co-ordinating the repayments, they said.
With sanctions blocking banking channels, Indian refiners have since February 2013 paid nearly half of the oil import bill in rupees while keeping the remainder, pending opening of payment routes.
The refiners had last paid $ 700 million to Iran in October using a limited window provided by the US to clear some of the outstanding using the dollar.
At that time, Essar Oil had paid $ 338 million while MRPL had remitted $ 299 million. IOC had paid another $ 60 million while HPCL paid $ 3 million.
The dues to Iran on crude oil that refiners buy have accumulated as western sanctions blocked payment routes since 2013.