Yuan will not be used by India for payment of Russian oil imports
The Indian government’s is very clear on the subject of payment for oil imports from Russia. India is not going to pay in Chinese yuan but only in either Indian Rupees or Russian Roubles. India has rightly blocked its oil importers from using Chinese yuan to pay for Russian oil.
This is a very prudent move even it pushes up companies’ operating costs by a very small amount. New Delhi cannot permit use of Chinese yuan at any cost for imports from a third country.
Yes if China is ready then India can have a talk on bilateral trade using Rupee and yuan for import / export settlements, between the two countries. However Yuan will not be used for payment for imports from a third country….no way.
Since the Russians have been slow in agreeing to a Rouble… Rupee e change rate, it has held up payment for at least seven cargoes. While Indian traders are seeking alternative methods of settlement, Russian sellers are insisting for yuan. Well, Indians are not fools, so if it is not Roubles or Rupees, then oil imports from Russia may start reducing.
Russia and India have been arguing over oil settlements since the beginning of the year. With Russia being banned from accessing the SWIFT system, New Delhi has sought to promote rupee settlements for Russian oil imports, which clearly is the best choice for Russia.
The rupee has started circulating in Middle East, SAARC Countries less Pakistan, BIMSTEC and is being welcomed even by the ASEAN. Day by day many countries are going to use it for transactions. Thus holding rupees means Russia easily buy Indian products not only from India but also trade with UAE and many other Middle East Countries. This will be very handy for Russia in time of Western sanctions.
With acceptance of Rupee in bilateral trades by increasing number of countries, the rupee’s exchange rate is becoming less volatile, and Russian profits are not going to shrink as a result.
The Indo Russian trade has to be in Rouble / Rupees, as using yuan is clearly not an option or choice by India. Even if the Chinese claim that their currency has become the world’s fifth most-used currency for reserves, payments and trade, and the third most-used for trade financing, it will cut no ice with India.
India has decided to economically disengage gradually with China over recent years. This because of China still being in occupation of Indian territory and not ready to resolve the Indo Tibetan border issues and not ready to demarcate Tibet China border. Government of Indian has taken a firm stand on payment for oil imports from Russuia. It is now upto Russia to continue selling or disrupt the normal operations.
India’s recent purchases of Russian oil have been not only a big support for Russia in face of Western sanctions but has also helped lower the cost of oil imports for India. This has no doubt helped its own economic performance. However hampering the transactions may be an ill-advised move for Russia. For India it will be only an irritant.
Moreover, New Delhi aims to promote the internationalization of the rupee, and because of this, it is going for bilateral trade pacts with as many countries as possible. India’s manufacturing sector, too is growing by leaps and bounds.
