According to three executives at the processors, the Reserve Bank of India has requested that the nation's principal state-owned refiners pressure Persian Gulf suppliers to accept at least 10% of oil payments in rupees for the upcoming fiscal year.
The executives, who wished to remain anonymous since the issue was delicate, stated that the goal of the action is to increase the use of Indian currency in foreign trade and reduce reliance on US dollars. According to them, the government wants to take advantage of the rising consumption to further its own interests and is concerned that India's rapidly increasing energy demand will put downward pressure on the currency.
The executives stated that although the three refiners, Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp., have already contacted oil exporters about the issue, the suppliers are resisting because of conversion fees and currency risk. The Indian refiners have been requested by the central bank to pay a portion of the currency transaction fees, but they are opposing the proposal because they believe it will reduce their profit margins.
Emails requesting comment from the three refiners' communications staff went unanswered, and an RBI representative was not immediately available for comment.
India, the third-biggest importer of crude oil in the world, is expected to spearhead the increase in global demand this decade. Global oil transactions are primarily conducted in US dollars, while China has made considerable progress in leveraging the yuan to cover import costs.
In August of last year, Indian Oil sent one million barrels of crude oil to Abu Dhabi National Oil Co. in exchange for rupees. But since then, there haven't been any exchanges of the currency. The nation's refiners have also paid for Russian oil with other currencies, such as UAE dirhams.
