India will pay 45 per cent of its nearly $ 12 billion annual crude import bill to Iran in rupees. The two countries would work out other methods for remaining payments, Iranian Ambassador to India, Seyed Mehdi Nabiz­adeh told reporters on Tuesday. US cannot harm the relations between India and Iran, he reiterated.

This has come close on heels of increasing tensions between the Islamic country and the United States (US). India fears that recent US sanctions may hamper the current payment mechanism routed through Tehran’s Halkbank. India buys about 18.499 million tonnes of crude from Iran that accounts for 12 per cent of the country’s demand.

India has cleared all past dues to the Islamic nation and future payments will be settled according to the latest mechanism. No transactions will be made in gold, as it is not a suitable procedure.

Financial Chronicle reported this development on Monday. “Fortunately, a suitable mechanism has been found by the two countries. Officials of both countries met last week and both the Central Bank of Iran and Reserve Bank of India are happy with this arrangement. This mechanism is agreeable to both countries,” said Nabizadeh.

“We will find the mechanism (remaining non-rupee of 55 per cent). This (mechanism) will become much easier,” the Ambassador added.

Iran has opened bank account with state-run Kolk­ata-based UCO Bank to make the payment arrangement workable. The West Asian country can use rupees to buy other articles from India such as tea, wood, machinery, iron, steel, minerals, clothes, fibre and automobiles, among others.

This will help to bridge the trade deals between two nations. At present, India’s export to Iran is just one-fourth against the import bill.