Oil Minister M. Veerappa Moily has told Prime Minister, India plans to save over $8.5 billion in foreign exchange this fiscal by increasing crude oil imports from Iran.
India, which paid about $144.29 billion last fiscal for importing oil, is renewing imports from Iran as unlike imports from other countries it pays the Persian Gulf nation in rupees. Detailing plans to save $20 billion in foreign exchange spending, about 11 million tonnes of crude will be imported from Iran in the remainder of the fiscal.
About 2 million tonnes crude oil has been imported from Iran so far during the current financial year. An additional import of 11 million tonnes during 2013-14 would result in reduction in forex outflow by $8.47 billion (considering the international price of crude oil at $105 per barrel).
The biggest component of the plan is restarting import of oil from Iran. As US and western sanctions blocked all payment routes, India pays Iran in rupees in a Uco Bank branch in Kolkata.
Moily’s plan is in response to the PM’s call to the ministry seeking a $25 billion cut in the oil import bill to narrow the current account deficit. He has suggested several measures to reduce the oil import bill by $19-20 billion this fiscal.