Venezuela can’t pay its millions of dollars in debt to Indian pharmaceutical companies, say Indian officials, so officials are considering a proposal that would see the Latin American country swap oil for its drug debts.
After an unlucky gamble on India’s part that Venezuela’s emerging economy would be a good place to hawk Indian pharmaceuticals, the debt is now mounting and poor crisis management coupled with the long-running oil price slump has left Venezuela too cash strapped to pay up.
Already, according to Indian media, India’s Dr Reddy’s pharmaceutical company has written off US$65 million in debt in the first quarter of this year, while Glenmark Pharmaceuticals Inc is looking to collect some US$45 million in unpaid debt from Venezuela.
"The situation in Venezuela is very precarious ... the government knows it needs to do something about the medicine shortage, that's why it is willing to discuss such a deal," Reuters quoted an Indian official as saying.
Indian officials cited by local media have suggested that the oil-for-drugs proposal has come from the Trade Ministry, which envisions using the State Bank of India as a mediator in the swap.
“The finance ministry has assured us that the government is fully committed to it, but it will take time," India’s Economic Times quoted P.V. Appaji, Director General of the Pharmaceutical Export Promotion Council of India, a body under the country's commerce ministry, as saying.
It’s not an unprecedented idea. India has swapped rice and wheat for Iranian oil when Iran was under sanctions.
For now, the deal proposal is embryonic, though Indian officials cited by local media claim that Venezuela is on board with the idea, while high-level meetings should take place this summer.