India never expected that trade with Russia would be required not to be paid in rupees but only in RMB.

Recently, the settlement method of Russia-India oil trade has changed. Russia requires Indian state-owned refining companies to use RMB to pay for crude oil. India's largest refiner,"Indian Petroleum Company", has quietly completed several RMB settlement transactions. You know, the Modi government has been trying to promote the "internationalization of the rupee", but this time Modi felt extremely cold. No one wanted the rupee, and India could only be forced to bow its head and finally had to accept RMB settlement to ensure energy supply.

According to continuous reports from Reuters from October 7 to 8, Russian oil traders have officially requested Indian state-owned refineries to pay crude oil in RMB. Indian oil companies have recently used RMB to complete the payment of two to three batches of Russian oil. The operational details of this settlement transition show that the transaction is still priced in US dollars to comply with the EU's price cap policy on Russian oil, but the payment link directly uses the equivalent of RMB. This arrangement solves the problem of loss of dirhams or US dollars in previous Russia-India trade., because RMB is currently the main currency that can be directly converted into the ruble.

In fact, India's settlement of the RMB is not the first attempt, in 2023, state-owned refineries had suspended the use of the RMB due to tensions in China-India relations, but private enterprises continued to use, this re-use is directly related to the recent easing of China-India relations and Russia's strengthening of the de-dollarization strategy.

The data show that the share of Russian oil imported from India has surged from less than 1% before the conflict to 35%-40%, India saved $8-10 per barrel with discount prices, and energy trade in the first quarter of 2025 reached $25 billion. At the same time, the US Trump administration imposed a 50% tariff on Indian goods, trying to pressure India to reduce its dependence on Russian oil, but India's Commerce Minister Goyal responded with a hard response "unless the United States provides the price of oil, it will continue to buy Russian oil."

In fact, for Russia, using RMB for settlement is a "last resort", but it is also the "optimal solution" at this stage. The reason is very simple. Western sanctions have cut off Russia's connection with the US dollar and euro system, forcing Russia to seek alternative currencies. Russia has tried the ruble, dirham and rupee, but all have obvious shortcomings: the ruble exchange rate fluctuates violently, the dirham has limited liquidity, the rupee is difficult to accept by Russia due to Indian capital controls and devaluation risks, and it is difficult for Russian companies to use the rupee. Used for international procurement.

So, the RMB became the first choice, on the one hand, the Chinese-Russian trade native currency settlement system is mature, the Russian foreign exchange market RMB accounts for 99.6%, on the other hand, the RMB can directly exchange the ruble through the CIPS system, avoiding the risk of sanctions.

For India, settlement in RMB is also beneficial. On the surface, it is a setback for the "internationalization of the rupee", but in fact, it is a realistic choice for energy security to overwhelm currency independence. India relies on imports for more than 80% of its crude oil. The economic benefits brought by Russian oil discounts will import 1.75 million barrels per day in the first half of 2025, saving more than US $12.6 billion, making it difficult for India to abandon Russian oil channels. Although India has promoted the "oil rupee" mechanism and hoped that Russia will buy Indian goods in rupees, the low international recognition of rupees and the unstable exchange rate have led to little interest from Russia. In addition, the threat of US tariffs further compresses India's diplomatic space, which also forces the Modi government to choose the latter between "face" (rupee sovereignty) and "lining" (energy interests).

But in any case, the Russian-Indian oil trade shift to the RMB, is an important progress in the internationalization of the RMB, currently the global payment share of the RMB is only about 4.5%, but the usage rate in commodity transactions steadily increased. Previously the six countries of the Middle East established the "oil RMB alliance", Brazil using the RMB to settle agricultural products trading, and so on, all show the resource countries to increase the acceptance of the RMB. This trend is thanks to China's stable monetary policy, sufficient supply of commodities, holding the RMB can directly buy Chinese industrial goods, and the clearing facilities provided by the CIPS system. However, in the short term, the RMB is still difficult to shake the dominance of the US dollar, its internationalization more rely