BRICS Divide: India Unhappy with Push for Yuan Over US Dollar in Oil Trade
Is India losing faith in the BRICS push to dethrone the US dollar? Recent reports indicate a growing unease within India regarding the increasing pressure to settle oil payments in Chinese Yuan, particularly with Russia. While BRICS nations aim for de-dollarization, India's position is proving complex and nuanced.
India's Yuan Dilemma: Saving Money, Losing Control?
In early 2025, reports surfaced highlighting the potential benefits of alternative currency settlements. One report claimed that India potentially saved $7 billion in exchange rates by paying for Russian oil in yuan and rubles in 2025. However, the reality appears far more intricate. While some Indian refiners, including the Indian Oil Corp (IOC), have reportedly begun settling payments for oil procured from Russia using the Chinese Yuan, this isn't necessarily a wholehearted embrace of the trend. The oil was procured from Russia and India isn’t completely comfortable with this direction.
Russia's Yuan Demand Sparks Discontent
The crux of the issue lies in Russia's increasingly insistent demand for yuan-denominated payments. Specifically,Russia’s demand to settle every crude oil shipment in yuan did not sit well with India. This preference has reportedly caused significant friction, with reports suggesting that India’s unwillingness to pay the Chinese Yuan for Russian oil imports has held up payments for seven cargoes reported Reuters. While the payment disputes have reportedly not disrupted the oil supply completely, the underlying tension is palpable.
India's Resistance to De-dollarization and Yuan Dominance
A key reason why India is not backing de-dollarisation is the rise of the Chinese yuan as a challenger to the US dollar. India's reluctance stems from a strategic hesitancy to simply replace the US dollar's dominance with that of the Yuan. Instead, India favors bilateral trade in national currencies, as evidenced by their continued use of rubles for some transactions. India has resisted using the yuan for Russian oil imports. This strategic balancing act underscores India's desire for a multipolar currency world, rather than a Yuan-centric one.
US Sanctions and the Search for Alternatives
Compounding the issue are US sanctions, including a price cap of $60 per barrel on Russian oil. India is facing problems in settling oil with Russia as the US imposed a price cap of $60 per barrel. The move forces buyers to use other currencies like the Chinese Yuan, Russian. This external pressure further complicates India's calculations, forcing it to explore alternative payment mechanisms while simultaneously attempting to maintain independence from Chinese financial influence.
BRICS Currency: A Cautious Approach
Despite the ongoing discussions surrounding a potential BRICS currency, India has, however, been cautious regarding a BRICS currency even as New Delhi and Moscow continue to trade in their respective currencies for oil. The development of a BRICS currency faces numerous hurdles, including differing economic priorities and the question of which currency would underpin it. India's measured approach reflects a pragmatic assessment of the challenges involved.
In conclusion, while the BRICS nations are actively pursuing avenues to reduce reliance on the US dollar, India's stance is marked by caution and a desire to avoid simply replacing one dominant currency with another. The tension surrounding Yuan-denominated oil payments highlights the complex dynamics at play within the BRICS alliance and India's strategic navigation of a shifting global economic landscape.