New Delhi: In a novel scheme, India is talking to oil rich countries in the Middle East for a possible swap of crude oil for food.
India needs large amount of crude oil for meeting its energy needs while the Middle East countries are short in food production.
"Can there be not an arrangement where they meet our oil needs and we meet their food requirement," Oil Minister Dharmendra Pradhan told reporters here.
Talks at the highest level have been initiated with the UAE for an oil-for-food programme and similar dialogue is one with other oil exporters.
"They can invest in our strategic oil storages we are building. They can also store their oil here. The condition being that the first right of use on two-third of oil stored would be of India," he said.
India which is surplus in wheat, rice and other products can supply them to UEA and other Middle East countries. "We get an assured export market for our farmers," he said.
India, the world's third biggest oil consumer, imports 80 per of its oil needs. About 60 percent of the oil imports are from Middle East nations.
Pradhan said UAE's national oil company Adnoc has agreed to store crude oil in India's maiden strategic storage and give two-third of the oil to it for free.
India is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil to guard against global price shocks and supply disruptions.
Abu Dhabi National Oil Company (ADNOC) is keen on taking half of the 1.5 million tons Mangalore facility.
It will stock 0.75 million tons or 6 million barrels of oil in one compartment of Mangalore facility. Of this, 0.5 million tons will belong to India and it can use it in emergencies. Adnoc will use the facility as a warehouse for trading its oil.
The 1.33 million tons Visakhapatnam storage and 2.5 million tons Padur stockpile together with 1.5 million tons Mangalore storage will be enough to meet nation's oil requirement of about 10 days.
In the Budget for 2016-17, Finance Minister Arun Jaitley exempted foreign companies from income taxes on permitted local sales of oil kept in the underground caverns.
But states like Karnataka continue to impose VAT on such sale, deterring companies from stocking oil.
The Indian model is similar to the Japanese model wherein Tokyo saves money by allowing other nations to store crude but has first access to it in the case of an emergency.