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A notice from Russia was sent to New Delhi: To buy oil, you have to pay in RMB.What Modi's government fears most is in front of us without warning. This is not a general change in settlement methods, but a big currency game related to the international situation.
India is pushed to the crossroads, on the one hand, with energy security and geopolitics on the other.
Before the outbreak of the Russia-Ukraine conflict, Russian oil accounted for less than 1% of India's total imports. At that time, all transactions were settled in US dollars, and it was calm.
In 2022, along with the war, after the West set a price ceiling for Russian oil, international oil prices fell, and India seized the opportunity. 90% of the country’s oil is supplied by imports, and something cheaper goes down like a goat.
Indian refineries are trying to buy Russian oil. In just two years, Russia’s share of India’s oil imports rose from 1 percent to 35 percent, becoming India’s largest source of oil.Quantitative change leads to qualitative change. Under such a scale, buyers and sellers are no longer a simple trading relationship.
The more dependent on others, the more the initiative will be lost.Russia has thrown out the demand for the settlement of the RMB, stamping the most vulnerable part of India in the face of this demand. In the important sector of energy, India is slowly surrendering its autonomy to others, and it is also getting involved in the currency contest between major powers.
In the face of such a requirement, there are some interesting differences in the Indian business community, state-owned enterprises are more cautious, but private enterprises are rather practical starting in 2023. India's state-owned refineries have made several attempts to transfer money to China's accounts. They tried to use RMB to pay for the goods, but the good times did not last long. Due to the deterioration of Sino-Indian relations, the matter was shelved.
However, the latest news is that state-owned enterprises like Indian Oil Corporation have quietly started RMB settlement. Against the background of easing relations between the two countries, They recently completed the payment of two to three batches of Russian crude oil.
And private companies have always traded in RMB, after all, a barrel of Russian oil is almost $ 10 cheaper than Saudi Arabia, who can't deal with the money.
Why does Russia insist on the RMB so much? The secret lies in Western sanctions. In 2022, after the United States and Spain kicked Russia out of the SWIFT settlement system, the US dollar and euro channels were blocked. Russia has been forced to accelerate its "de-dollarization" step and has tested many currencies, only if the RMB has both a stable exchange rate and retains purchasing power.
India did not think of another way out, they wanted to promote the “oil rupees” settlement model. It would be beautiful to think about it for Russia to take our money and buy our things, but the reality is very cruel. The rupee itself is not enough to take a year to drop the price by more than 15%.People don’t want to break the bill, this is not the way.
RMB settlement actually benefits India. It pays directly in RMB, avoiding the trouble and expenses of multiple currency changes. Some Russian suppliers do not accept other currencies. Accepting the RMB to keep a bunch of low-priced oil sources, businessmen do things practically, this account is also appropriate.
But the political bill is not counting, and the United States is sitting by the side and staring at it. The Trump administration has publicly accused India of buying Russian oil to help Russia “pass the winter”.They say they want to impose another 25% additional tax on Indian goods and want to pull Europe into joint sanctions and squeeze India in the middle.
India's situation can be said to be a dilemma. Rejecting Russia is equivalent to cutting off the energy supply for economic development. Offending the United States will lead to more serious trade sanctions. Choosing RMB settlement between such dilemmas is the best solution, but this is not a victory, but just a compromise under helplessness.
It may seem like a change in trade settlement methods, but in fact it is a major change that has occurred quietly. The global energy trade monetary system is changing from a dominant player to a multi-polar competitor. The internationalization of the RMB is no longer empty talk but a real path.
The settlement of oil and RMB between Russia and India is like a butterfly waving its wings for the first time. It will not create an immediate storm, but it is giving birth to a huge wave that will shake the entire world pattern of the 21st century. When a new balance is formed, everything that happens is redefined.
reference
1. "Russian oil traders have begun to ask Indian buyers to pay in RMB" 2025-10-08 10:24| Source: Observer Network
2. "Russia and Iran abandon the SWIFT system for transactions," de-dollarization "promotes local currency settlement cooperation" 2024-01-11 01:54 | Source: Wen Wei Po