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BASICS
India has signed an agreement with Iran to pay for crude oil it imports from the Persian Gulf nation in rupees The memorandum of understanding (MoU) was signed following the U.S. letting India and seven other nations to keep buying Iranian oil despite sanctions were reimposed on the Islamic state on November 5.
INDIA’S EXEMPTION FROM IRAN SANCTIONS
- India had won the exemption after it agreed to cut imports and escrow payments.
- Under the 180-day exemption, India is allowed to import a maximum of 300,000 barrels a day of crude oil. This compares to an average daily import of about 560,000 barrels this year.
- India, which is the second biggest purchaser of Iranian oil after China, has since then restricted its monthly purchase to 1.25 million tonne or 15 million tonne in a year (300,000 barrels per day), down from 22.6 million tonne (452,000 barrels per day) bought in 2017-18 financial year, sources said.
NOW, WHY IS INDIA DOING THIS?
- Primary reason is because U.S has blocked payments of USD and Euro
- Earlier India used European Channels to make payments to Iran
- But in November they were blocked
HOW DOES PAYING IN RUPEES HELP INDIA?
Iran will mostly use the Indian currency in buying goods from India that will help Indian businesses. It will create some sense of faith in the Indian rupee as a mode of transaction Our rupees will gain huge on convertibility index
EUROPE PLANS TO LAUNCH A SPECIAL PAYMENT CHANNEL FOR IRAN SOON
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