New Delhi: The Ministry of Oil and Natural Gas said oil suppliers continue to hesitate to settle import accounts in Indian rupees due to the country’s business imbalance.
The statement comes in response to concerns raised by the permanent oil and natural gas committee when the trade in the oil of denominated rupees is slow. The ministry said the oil companies constantly cooperate with suppliers to negotiate oil settlements in Indian Rupia (INR).
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The Committee urged the Ministry to coordinate with the Ministry of Finance and the Indian Reserve Bank (RBI) to remove the narrow places in the settlement of oil imports and more effectively support this practice.
Mint announced June 11 that the mechanism of settlement of rupee, which started in 2022 to facilitate the trade with sanctions Russian, tried to obtain traction, most transactions still being carried out in Dirhams UAE.
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“Oil companies are constantly dealing with suppliers to negotiate oil settlements in Indian rupees (INR). However, due to imbalance in business streams, where imports are significantly prevailing, suppliers hesitate to settle oil accounts in INR.”
The Ministry noted that the RBI and the central bank of the UAE (CBUAE) signed a memorandum of understanding in Abu Dhabi to support the use of local currencies (INR) and SAE Dirham (AED)-for cross-border transactions.
With the support of RBI Indian Oil, she successfully made the first payment of rapes for imported oil supplied by Adnoc on August 14, 2023. The invoice for one million barrels of raw was paid 80:10:10 in USD, INR and AED, the ministry said.
The Committee has previously emphasized that raw suppliers are afraid of repatriation of funds in their preferred currency, high transaction costs of converting currency and the risk of exchange rates. He recommended that the Ministry of Oil be involved in the Ministry of Finance and RBI to resolve these obstacles.
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In its latest report, The Panel Headed by Sunil Datatrey Tatkare, Lok Sabha Member from Raigad, Maharashtra, Said, ”The Committee Are Not Satisfied with the Reply of the Ministry of As IT Does Not Describe the Action Response to the Recommentation of the Committee to Identify the Bottlenecks in Settlement of Crude Oil Import Bills in Indian Rupee and to design a suitable plan to make this program successful ”.
The panel stressed that the promotion of Indian Rupees in oil settlements is government policy and that all relevant agencies must make a common effort to perform it.
“In accordance with this, the committee will repeat its earlier recommendations to the Ministry of Oil and Natural Gas to deal with the problem with the Ministry of Finance and the Bank of India for the elimination of narrow places in the settlement of oil import laws in Indian rupees and promotion,” said the report.
India is a net importer of oil, which forms a significant part of the law on the import of the country. In FY25, the Indian Indian Act increased by 2.7% to $ 137.0 billion from $ 133.4 billion in FY24.
It was expected that a denomination trade would gain dynamics in Russia’s vans because India became the best buyer after US and European countries reduced Russian purchases in 2022. However, the mechanism did not obtain traction, despite the robust import from Russia. Experts mention the limited usefulness of Indian currency in Russia as a key reason.
The panel also reiterated its recommendation that the Ministry of Oil provides funds to state oil companies through Indian strategic oil reserves (ISPRL) for storage caves near refinery and explored ways to expand strategic storage capacity to satisfy the planned demand for oil products in 2040.
In Its Reply to the Initial Recommendation, The Minister Noted That Under Phase I of the Strategic Petroleum Reserve (SP) Program, ISPRL Built SP FACILITIES and Total Capacity of 5.33 Million Metric Tons (MMT) at Three Locations: Visakhapatnam, Andhra Pradesh (1.33 MMT), Mangalore, Mangalore, Mangalore, Karnataka (1.5 MMT), and Padur, Karnataka (2.5 MMT).
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The Union Cabinet approved the development of commercial strategic reserves CUM in Chandikhol (4 MMT) and Padur (2.5 MMT) in the partnership of the public and private sector with land for Padura in advanced stages. ISPRL continues to evaluate the expansion of storage capacity based on technical and commercial feasibility, the Ministry informed the panel.
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