Pharmaceutical tablets and capsules in foil strips are arranged on a table in this picture illustration taken in Ljubljana September 18, 2013. (Reuters Photo)

Highlights Unravelling of Venezuela's economy has triggered triple-digit inflation

It is facing severe shortages of food, water and medicines

Venezuela may be allowed to repay some of the amount owed with oil

© Thomson Reuters 2016

Indian officials say they have proposed an oil-for-drugs barter plan with cash-strapped Venezuela to recoup millions of dollars in payments owed to some of India's largest pharmaceutical companies.Several generics producers, led by the country's second-largest player Dr Reddy's Laboratories Ltd , bet heavily on Venezuela as they sought emerging market alternatives to slower-growing economies such as the United States.But the unravelling of Venezuela's socialist economy amid a fall in oil prices has triggered triple-digit inflation and a full-blown political and financial crisis. Unable to pay its bills, the country is facing severe shortages of even basic supplies such as food, water and medicines.Dr Reddy's wrote off $65 million in the March quarter, which it said was almost all the money it was owed from Venezuela. Rival Glenmark Pharmaceuticals Inc , another major investor, says it is due $45 million."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," an unnamed official was quoted as saying by news agency Reuters."At this point, even if our companies get back 5 or 10 percent of the payment they are owed, they would be satisfied."Venezuela's Health Ministry did not immediately respond to a request for comment.The Indian officials, who could not be named as they are not allowed to speak to the media, said the trade ministry had proposed a payment mechanism that would allow Venezuela to repay some of the amount owed with oil.The proposal, seen by Reuters, would use the State Bank of India to mediate the transfer. The plan is now awaiting approval from the Finance Ministry and the Reserve Bank of India, which regulates such payments.India, one of the world's biggest oil importers along with the United States and China, had similarly elaborate barter deals with Iran, swapping rice and wheat for oil."The Finance Ministry has assured us that the government is fully committed to it, but it will take time," said P.V. Appaji, Director General of the Pharmaceutical Export Promotion Council of India, a body under the country's Commerce Ministry.Dr Reddy's Chief Operating Officer Abhijit Mukherjee said last week that Dr Reddy's remained "very focused" on Venezuela, where it has signed deals with two government organisations."Only condition to the contract is that we will dispatch (products) only when we get either the LC (licensing certificate) or some advance," he said.