The Union commerce ministry is planning to apply the Iran model of ‘oil for export mechanism’ between India and Venezuela, wherein accounts will be settled by the Indian government to exporters in rupees, in terms of oil supplied by Venezuela to India. This strategic move is aimed to address the issues faced by the exporters due to delayed payment realisations from Venezuela in US dollars, leading to huge losses to the Indian counterparts.
To promote exports between the two nations, the government is seriously contemplating to adopt this strategy on all export sectors including pharma.
Dr P V Appaji, director general of Pharmaceutical Export Promotion Council of India (Pharmexcil) stressed that the commerce ministry is very keen to settle this matter at the earliest, especially since they have been receiving repeated representations from some of the member companies expressing difficulties and challenges they are facing due to this unsavory business situation.
“Obviously such issues create an unfavourable environment for doing business which may impact the exports and hamper business opportunities. Thus keeping in mind the priorities and the importance of timely addressing this issue, we had apprised and taken up this matter with the commerce ministry for devising a suitable strategy or solution for adjusting the payment realisations. It is in this context that the ministry of external affairs has taken an initiative to device bilateral financial mechanism between India and Venezuela for facilitation of trade as well as to ensure due payments to oil companies and various exporters from India,” Dr Appaji informed.
Interestingly, government is contemplating the same after it had successfully applied the same strategy with Iran. UCO bank acts as the facilitator or the settlement bank for the exporters who receive the amount in rupees from the Indian government in exchange of oil from Iran.
It is understood that the ministry of commerce is soon planning to have a high level meeting with key stakeholders to deliberate over the issues relating to exports to Venezuela with keen focus on this subject. To ensure proper representation on this, Dr Appaji has urged all the exporting pharma companies to Venezuela, to send in their suggestions at the earliest.