Venezuela oil
Crude oil drips from a valve at an oil well operated by Venezuela's state oil company PDVSA, in the oil rich Orinoco belt, near Morichal at the state of Monagas April 16, 2015 [Representational Image].Reuters

In order to recover nearly $100 million from the crisis-hit Venezuela, the Indian government officials have suggested an oil-for-drugs deal to the country. The South American country owes the amount to leading Indian pharma companies, such as Dr Reddy's, Sun Pharma and Glenmark.

Venezuela is currently faced with a political and economic crisis following the rise of public unrest against President Nicolas Maduro. The country is in a constitutional state of emergency, according to CNN. The inflation rates in Venezuela have gone up by 700 percent and there is an acute shortage of essential supplies such as food and medicines in the country.

Indian pharma companies, who supplied medicines to the country through their subsidiaries set up there, were hit by the existing crisis in 2015, and have since been unable to recover their funds.

The Indian government officials on conditions of anonymity told Reuters that the commerce ministry has floated a proposal that would allow Venezuela to repay some amount by supplying oil to India.

Venezuela is one of the world's largest exporters of oil and is a major source of oil supplies to India.

"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 Indian official was quoted by Reuters as saying. The official added that at this point even if the Indian firms get back 10-15 percent of the money they are owed, they would be satisfied.

According to a Business Today report, Venezuela owes about $60 million to Dr. Reddy's, and $30-35 million to Glenmark.

Indian exports, mostly medicines, to Venezuela have almost gone down by 50 percent between April 2015 and February 2016 to $125.5 million, compared with a year earlier.

The Indian official told Reuters that Venezuela has been receptive to the plan "in principle, but is yet to make any commitments." The proposal envisages making the State Bank of India as the mediator in the deal and is awaiting approval from India's finance ministry.

"The finance ministry has assured us that the government is fully committed to it, but it will take time," PV Appaji, the Director General of the Pharmaceutical Export Promotion Council of India, a body under the country's commerce ministry, was quoted by Reuters as saying.

Although Indian companies have now stopped supplying medicines to Venezuela, the firms have said that they would not shut their operations completely in the crisis-hit country due to a lot of potential in the pharma market there.

Dr Reddy's Chief Operating Officer Abhijit Mukherjee reportedly said last week that the company is still focused on signing deals with Venezuela and that it would set the condition of getting the licensing certificate now before signing any deal.

Glenmark, on the other hand, said that it is keeping a close watch on the developments in Venezuela and will take a call accordingly. "We are extremely encouraged that the Indian government is taking constructive steps to recover our money that is stuck in our own Venezuela subsidiary," Glenn Saldanha, the Chairman and Managing Director of Glenmark, said in an emailed statement, Reuters reported.

The drugs supplied by Indian firms account for 70 percent of basic medicines available in Venezuela.