India has asked Kuwait to drop its requirement for buyers in new refinery projects to open letters of credit (L/Cs) to finance crude oil purchases from the Gulf country.

The request was made in a joint statement issued after talks in New Delhi between India's prime minister, Manmohan Singh and his Kuwaiti counterpart, Sheikh Jaber Al Mubarak Al Hamad Al Sabah

Deeper engagement

At the end of an official visit to India by a delegation led by the Kuwaiti prime minister in early November, the two countries said they had decided to deepen their engagement in several areas, including energy security, petrochemicals, infrastructure development and information technology.

Kuwait is already the fourth largest supplier of India's energy needs and provides nearly ten per cent of India's petroleum imports, while annual bilateral trade is worth over US$17 billion.

Mutually beneficial

A substantial amount of this trade is tied to Indian imports from Kuwait, but India now wants more mutually beneficial trade and investment relations with the Gulf state.

One area under serious discussion is the possibility of jointly developing refineries using Kuwaiti feedstock and Indian resources and capabilities.

L/C-free agreement

India has asked Kuwait to consider a ten-year agreement to meet the increased crude oil demand for the new refineries.

The agreement calls for better terms for India than it currently has with Kuwait, including the abolition of L/Cs and interest free credit periods up to 60 days, which the Kuwaitis are reportedly considering favourably.

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