The Reserve Bank of India has asked the country’s major state-owned refiners to press Persian Gulf suppliers to accept at least 10% of oil payments in rupees in the next financial year, three executives at the processors said.
The move is aimed at promoting the Indian currency in international trade and cutting dependence on dollars, said the executives, who asked not to be named due to the sensitivity of the matter. The government is worried that India’s booming demand for energy will put downward pressure on the rupee, and also wants to leverage the growth in consumption to its own advantage, they said.
The three refiners — Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. — have already approached oil exporters on the matter, but the suppliers are pushing back due to currency risk and conversion charges, the executives said. The central bank has asked the Indian refiners to bear part of the currency transaction charges, but they are also resisting the idea on the grounds it will erode margins, they said.
An RBI spokesperson wasn’t immediately available for comment, while communications staff at the three refiners didn’t reply to emails seeking comment.
India is the world’s third-largest crude importer and is forecast to be the leading driver of global consumption growth this decade. The vast majority of global oil transactions are in dollars, although China has had some success in using the yuan more to pay for imports.
Indian Oil partly paid Abu Dhabi National Oil Co for a shipment of 1 million barrels of crude in rupees last August. However, there haven’t been any transactions in the currency since then. The country’s refiners have also used other currencies — include UAE dirhams — to pay for Russian crude.