New Delhi: The on-going spat between India and Iran over settlement of dues from import of Iranian crude has had an unfortunate spill over with Indian engineering firms saying their inability to execute orders inside Iran may result in losses amounting to billions of dollars in lost business opportunity. The contracts are mainly in the hydrocarbon sector.
According to reports, since April, Indian companies have been unable to execute orders of over Rs300 crore in Iran, with engineering giant, Larsen & Toubro alone accounting for around Rs100 crore.
The payments problem has arisen in the wake of an RBI circular in December 2010, barring transactions with Iran taking place through the Asian Clearing Union (ACU), a facility intended for intra-regional transactions.
With the ACU facility blocked and US and European banks blocking payments on Iran-related transactions to Indian exporters due to global sanctions, Indian banks, like SBI, are unable to accept letters of credit for such transactions.
L&T officials are quoted as saying that the business opportunity lost is quite substantial, almost to the tune of $2 billion. Although the company has bagged orders worth crores they are unable to execute them.
The matter will apparently be taken up with the ministry of commerce. Indian exporters of commodities such as tea, tobacco and basmati rice too have been hurt by the lingering crisis.