India is making about 10 percent of its payments for Russian oil in the Chinese yuan, with the rest of the payments being made in Indian rupees and UAE dirhams.
The US and European sanctions and oil price caps imposed on Russia in the aftermath of its invasion of Ukraine has resulted in two major changes in the way India goes about importing its crude oil requirement.
The first change was the sharp increase in India’s oil imports from Russia, with India taking advantage of the discounts being offered by Russia.
The second change has to do with how India pays for this oil — having to rely on alternate currencies, as Russia can no longer do business in the US dollar, the currency in which payments were earlier being made.
India had started paying for Russian oil using dirhams, but that experts were of the view that this alternative would be short-lived because Russia was accumulating more dirhams than it could use.
In fact, this was the reason rupee payments to Russia were also not working out.
In April, in a statement to news agency ANI, Denis Valentinovich Manturov, Russia’s deputy prime minister and minister for industry and trade, said that “because of a lack of imports from India, it’s not enough to use the rupee”.
Meanwhile, China’s exports to Russia jumped nearly 70 percent in the first three months of 2023 calendar year, coming in at $33.7 billion. In comparison, the total trade — both imports and exports — between India and Russia in the 2022-23 financial year stood at $39.8 billion. This shows the relative ease with which Russia can accept the yuan as payment, as opposed to the rupee. In short, Russia has more avenues to spend the yuan than it does the rupee.
