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No takers for rupee payment for oil imports

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Rupee finds no takers for payments for oil imports
  1. India’s initiative to use the rupee for crude oil import payments faced resistance as oil suppliers expressed concerns about fund repatriation and high transaction costs, despite the RBI’s allowance for such payments.
  2. The default payment currency for crude oil contracts remains the US dollar, following international trade norms, despite efforts to promote the use of the rupee in trade transactions.
  3. Major oil suppliers, including UAE’s ADNOC, voiced worries about repatriating funds in rupees and highlighted the high transactional costs and exchange fluctuation risks associated with accepting rupee payments.
  4. Indian Oil Corporation (IOC) reported incurring elevated transaction costs, passed on by crude oil suppliers, hindering the adoption of rupee payments for imports, despite RBI initiatives for rupee vostro accounts in partner countries.
  5. Despite being the world’s third-largest energy consumer, India faces challenges in encouraging major crude oil purchasers like Reliance Industries Ltd and oil PSUs to agree on using the rupee for crude oil purchases, with no existing agreements for such transactions.

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