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India to seek Venezuelan crude thru rupee-payment mechanism

With the US sanctions effective November, jus t about a month to go, India’s concern with crude oil import has driven it to seek crude oil from Venezuela with a rupee-payment mechanism.

It may be recalled here that earlier this year in the months of March and also of May, Venezuela has expressed willingness to accept Indian rupee for its crude so that it can also trade in Indian food products and medicines.

The Ministries of Commerce, Finance and Petroleum are looking into the proposal.

The rupee-payment mechanism is not a new concept, but there is a general agreement that the strategy for Venezuela cannot be similar to that for sanctions-hit Iran.

If the proposal works out successfully, the rupee-payment mechanism will prove a boon to Indian exporters, particularly in pharmaceutical products and non-basmati rice.

. “Rice is well-consumed in Venezuela and we see a huge potential, provided a proper payment mechanism is established,” BV Krishna Rao, President of the Rice Exporters Association, has said.

In the past, in the previous round of sanctions on Iran, India used rupee-payment and barter arrangements; but, now the situation is more challenging and difficult with Trump taking a very hardline approach against Iran; he has said that those who trade with Iran after November sanctions cannot trade with America.

Private refiners have already decided not to import oil from Iran which might lead to sanctions thereby losing access to the US financial system.

The US has not come out with a definite statement on waiver to India post-sanctions though there appears to be some softening in the bilateral relationships between Washington and Delhi.

 

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