India is looking at project exports to Iran to utilise the rupee payment option for oil purchases from that country, even as the two sides have begun fresh negotiations for settlement of payments in hard currency for a major part of the crude imports from early this year.
''Project exporters from India, including BHEL, SAIL, IRCON and RITES, are already in talks with Iranian companies on possible opportunities,'' reports quoting commerce ministry sources said.
India pays for 45 per cent of oil purchases from Iran in rupees, which is deposited in its rupee account in UCO Bank. Since Iran utilises this for purchases here, it opens up a huge opportunity for India to export goods and services to that country.
An inter-ministerial group headed by commerce secretary SR Rao met on Tuesday to discuss ways of boosting exports to Iran. The meeting was attended by senior officials from the Department of Economic Affairs, RBI and public sector companies, including BHEL, SAIL, IRCON and RITES.
''We believe that if project exports from India take off, it could actually enable us to make the entire payment due to Iran for oil purchases in rupees,'' the official said.
India annually imports oil worth over $10 billion from Iran against average annual exports of around $3 billion to that country. However, India's exports to Iran this year is likely to cross $5.5 billion.
Indian oil refiners had cleared the arrears till the beginning of this year.
Meanwhile, Reserve Bank of India deputy governor H R Khan said the Iranian Central Bank has made fresh proposals for payment settlement following an agreement with western countries and relaxation of sanctions.
The rupee payment mechanism was put in place after foreign banks refused to deal with Iran following the US and EU sanctions on the country for its alleged nuclear activities.
India and Iran opted for partial payment in rupee after Turkey's Halk Bank discontinued a euro payment facility between India and Iran under pressure from the European Union and the US.
India is among the eight countries, including China, South Korea and Turkey, which import crude oil from Iran.
Since China, too, is interested in investing in projects in Iran in lieu of oil payments, the success of India would also depend on China's interest in trade with Iran.