India, Iran seal oil payment mechanism

Ruling out gold as a mode of payment, Iran on Tuesday said Indian companies will pay for 45 per cent of their oil imports from Iran in the Indian currency as part of a mechanism agreed between the two countries.

"Both the sides are satisfied," Syed Mehdi Nabizadeh, Iran's ambassador to India, told reporters.

"Gold is not suitable," he replied, when asked whether Iran will accept the yellow metal from India as part of payment for Iranian oil as was speculated earlier.

Iran could also increase its imports from India to settle part of the payments, he said.

With the US and the EU imposing fresh sanctions on Iran, India has been exploring various ways to pay for Iranian oil.

A multi-ministerial team from India visited Iran last month to work out the payment mechanism.

India has made it clear that regardless of the sanctions, it will continue to buy Iranian oil as it contributes around 12 per cent of its oil imports and is necessary for energy security of the country.