Indian refiners have cleared part of the $6.4 billion owed to Iran for crude oil imports in euros through Turkey's Halkbank, three sources privy to the payment said.
This is the first payment to Iran by India since the lifting of Western sanctions against the Persian Gulf nation earlier this year and comes just ahead of Prime Minister Narendra Modi's visit beginning on Sunday.
State refiner Mangalore Refinery and Petrochemicals Ltd paid $500 million while Indian Oil Corp has settled $250 million through the Union Bank of India, the sources said.
The refiners had been holding back 55 percent of the oil payments to Iran after the route to make payments through Halkbank was stopped in 2013, although payment of some of those funds was allowed after an initial temporary deal to lift the sanctions.
It is not yet known when the second instalment will be paid, the sources said. India is one of the biggest buyers of Iranian crude, and is set to import at least 400,000 barrels per day.
