Indian oil companies are increasingly negotiating crude oil settlements in Indian rupees (INR), but foreign suppliers remain hesitant due to a persistent trade imbalance. According to the Ministry of Petroleum and Natural Gas, suppliers are reluctant to accept the currency as they have limited options to utilize rupee reserves for their own international trade. This comes despite a parliamentary committee recommendation to use rupees for oil imports to conserve foreign exchange.
The committee highlighted a “lack of momentum” in implementing the RBI’s arrangements for payment and settlement in INR. While authorized banks are permitted to open Rupee Vostro accounts for foreign banks, the actual uptake has been slow. The committee reiterated that promoting the rupee as an official policy is incumbent on all government agencies to ensure successful implementation and reduce dependency on major global currencies.
Beyond payment issues, the committee warned that over-reliance on any single region for energy supplies could threaten national energy security. It has recommended that the petroleum ministry take concrete steps to diversify its import sources by exploring new international partners. Ensuring uninterrupted supplies at reasonable prices remains a critical goal to support India’s rapidly growing economy.