India will only pay for Iranian oil with foreign currency until July 2012, when European Union sanctions take effect, and after that it will pay in rupees.
Bloomberg reports that India will try to avoid international sanctions on trade with Iran by using the rupee as the currency of payment.
The report indicates that the current transactions between Iran and India are made through the Turkish based Turkiye Halk Bankasi AS, which has warned Indian refiners that it may be unable to act as intermediary when EU sanctions take effect.
India, Iran’s second-largest oil consumer, has indicated that it is willing to continue trade with Iran despite the international sanctions imposed on Iran over its nuclear disputes.
The United States has warned consumers of Iranian oil, including China and India, that it wants to see “detailed plans for cutting oil imports from Iran” or else they will become subject to U.S. financial sanctions.