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Dear Members,
The council has received communication from the Department of Chemicals & Petrochemicals (DCPC), Ministry of Chemicals & Fertilizers, Government of India regarding Agreement for settlement of bilateral trade payments between India and Iran.
As you might be aware, Governments of India and Iran have entered into an arrangement for settlement of bilateral trade payments between both the countries.
The Salient features of this agreement, as per DCPC communication are re-produced as follows for your information:-
Agreement for settlement of bilateral trade payments between India and Iran
1. The Indian Rupee Vostro accounts may be opened by designated Iranian banks in UCO Bank in India and other mutually agreed banks assigned for this purpose.
2. The Indian Rupee Vostro accounts of Iranian banks will be credited 100% in Indian Rupees by Indian importers, including oil companies, against invoices payable for the supply of goods and services from entities in Iran, without the requirement of any additional certification or authorization. The agreement between trading Indian companies and Iranian companies would specify that the payments would be made in Indian Rupees.
3. Out of the total proceeds credited in Indian Rupees in the Vostro accounts, a minimum of fifty per cent will be utilized for items mentioned in paragraphs 4.1, 4.4 and 4.5 below. The balance amount may be utilized for items mentioned in paragraphs 4.2, 4.3, 4.6 and 4.7 below, which can later be repatriated in either Euro or Japanese Yen (or other currencies permissible under Indian laws) as per instructions from the Iranian side as and when international banking channels are available.
4. The amount credited to the above Indian Rupee accounts could be utilized by authorized
Iranian entities for the following purposes:
4.1 Make payments to Indian exporters of goods and services to Iran. The balances may also be used for settlement of payments of Indian exporters for transactions that took place prior to operationalisation of this arrangement.
4.2 Make payment to Indian companies undertaking projects and investments in Iran against their claims as well as to Iranian companies undertaking projects in India.
4.3 Investment in Indian Government Debt Securities. For this purpose interested Iranian government entities may register as a Foreign Portfolio Investor with the Securities and Exchange Board of India.
4.4 Meet establishment expenses of Embassy and Missions of Iran in India as to be mutually agreed.
4.5 Payment of fees of Iranian students studying in Indian Universities/Schools as to be mutually agreed.
4.6 Direct investment subject to terms and conditions stipulated in the Foreign Direct Investment Policy of Government of India.
4.7 Fixed/Term Deposit with the designated Indian banks
5. All the aforesaid payments would be in digital/cheque mode and as far as possible no cash transactions will be allowed, except for petty cash transactions of less than Indian Rupees 2,00,000 per entity per month.
6. The non-crude oil exports from Iran to India as well as the exports from India to Iran will be invoiced in Indian Rupees only. Crude oil exports from Iran to India will be invoiced in US Dollars and payable in Indian Rupees. The Reserve Bank of India's Financial Benchmark India Ltd (FBIL) reference rate for INR-US Dollar would be applied for the settlement of transactions. The applicable FBIL reference rate would be the rate quoted two business days prior to the contractual due date.
Members are therefore requested to take note of the above mentioned features of the Agreement for settlement of bilateral trade payments between India and Iran. The file with above details of agreement is enclosed for your reference.
Feed-back, if any may be sent on e-mail id’s ed@chemexcil.gov.in, deepak.gupta@chemexcil.gov.in & rodelhi@chemexcil.gov.in.
Thanking You,
Yours faithfully,
(S. G. BHARADI)
EXECUTIVE DIRECTOR
CHEMEXCIL
http://chemexcil.in/uploads/files/India-Iran_Trade_Agreement_(DCPC).pdf
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