Iran using rupee account to pay for massive tea import from India: Report
An account in rupee in India is being increasingly used to pay for Iran’s massive import of premium tea from the country, an Indian newspaper says.
The Economic Times said on Wednesday that Iranian importers were paying in advance from the account in India’s Uco Bank for Indian orthodox teas as they seek to circumvent US sanctions which restricts their ability to trade in major international currencies.
The report said tea exports from India to Iran almost trebled in the first four months of 2019 to reach 27.09 million kilograms, adding that the financial mechanism in rupee is properly serving the massive trade.
“Importers from Iran have made advance payments for Indian orthodox teas in anticipation that US sanctions may hit tea imports to the country,” said Anish Bhansali, a major tea exporter.
Faced with illegal US sanctions since last year, Iran has sought to establish bilateral mechanisms to settle payments with major trade partners.
Such mechanisms are mainly funded by Iran’s oil money as it is with the rupee account in India’s Uco Bank. Under the Indian system, New Delhi deposits money owed to Iran from oil purchases in rupee and then uses the credit to compensate Indian exporters of goods to Iran.
The Iraqi government said on Tuesday that it had set up its own financial mechanism to settle payments with Iran in its national currency dinar.
Governments have even announced that they would continue to inject credit to such accounts for future oil purchases if they are forced to cut imports of oil from Iran to zero.
A similar mechanism set up by Britain, France and Germany, known as Instex, to pay for European trade with Iran has failed to win Iran’s support as Tehran believes the credit injected is far too low to revive trade between Iran and Europe.
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