India to give incentives to rupee trade with Iran also

Indian exports to Iran under the rupee trade will receive incentives on par with those for export proceeds in freely convertible currency, the government said today.

"In respect of exports to Iran, export proceeds realised even in Indian rupee will be eligible to avail export benefits and incentives," according to the statement.

Iran has opened anew rupee payment mechanism for Indian exporters, in order to skirt western sanctions. Under this, Iran allows India to make 45 per cent of its oil payments in rupees.

Most exporters are satisfied with the new rupee payment mechanism through which they will get paid in rupees under an arrangement between Iran's Bank Persian and India's UCO Bank.

Under this, the Iranian bank has deposited some seed money with the Indian bank that will be used to make payments to exporters till the oil pool account gets operational.

If the money gets exhausted before the oil pool is operational, the Iranian bank is expected to replenish the account.