NEW DELHI (Reuters) - India is now paying Iran only in rupees for its oil after it lost another payment route in euros due to tougher sanctions from February 6, sources at local refiners said.
The rupee is only partly convertible, limiting its international acceptability, although Iran can use the currency to buy non-sanctioned goods and services from India.
Turkey's Halkbank had been handling payments for Iranian oil in euros from India since July 2011 after other conduits were choked by earlier sanctions, but the latest U.S. measures effectively prevent this, bankers said.
India is Iran's second-biggest client after China.
India had been paying through Halkbank for about 45 percent of its massive Iranian oil bill since April 2012 with the rest in rupees. The two nations had been trying to find goods for Iran to buy from India, to smooth a huge trade imbalance.
India's total exports to Iran in April-September 2012 amounted to $1.4 billion, a quarter of the value of its imports from Iran during the period, according to Indian government data.
There have been several visits by trade delegations to try to boost exports from India, especially of foodstuffs which are not prohibited under sanctions. Iran has bought sugar from India but attempts to sell wheat to Tehran have faced quality issues.
The two sides have yet to find another way to settle their oil trade and Indian refiners are currently retaining 55 percent of their payments to Tehran.
HPCL-Mittal Energy Ltd (HMEL), part-owned by steel tycoon Lakshmi Mittal may now be able to clear its dues in rupees, built up after India said it could only pay 45 percent in rupees and Halkbank refused to open a euro account for the private refiner.
HMEL bought a total 4 million barrels of oil from Iran between September and October 2012.
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