The Finance minister, Pranab Mukhejree has issued notification exempting payments made for crude oil purchases from Iran from any local tax, clearing the way for oil refiners to pay Iran in Indian rupee. India has decided to provide tax benefits and advance payments to Indian exporters for trading with Tehran in rupee currency, in an attempt to circumvent US sanctions against Iran and to continue the purchase of Iran oil. India will pay 45% of the value of its oil exports from Iran in rupees, the rest will continue to be paid in Euros.
The decision has came as a big relief to Indian exporters who had hoped to boost sales under the rupee scheme and to create a new market for their goods in Iran, after reduced imports from western countries under pressure from the sanctions.
Iran is India's third largest crude oil supplier accounting for less than 10 per cent of its total crude oil imports. New Delhi will import 15.5 million tons of crude oil from Iran this fiscal, down from 17.44 million tonnes of the previous year.
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