Geopolitics Drives India to Exclude Yuan in Trade with Russia

2 min readMar 20, 2023

Since the outbreak of the Russia-Ukraine conflict, trade ties between India and Russia have grown stronger, making India one of the largest buyers of Russian oil and discounted coal. At the same time, in order to avoid the impact of Western sanctions, India and Russia have been exploring trade settlement methods other than the U.S. dollar.

However, Reuters recently quoted sources as saying that India has asked banks and traders to avoid using the yuan to pay for imports from Russia and to use the UAE dirham as the settlement currency instead.

Indian officials involved in the development of the policy said that India is “uncomfortable” with foreign trade settled in yuan due to long-standing political differences between India and China. Therefore, until relations between the two countries improve, India will not allow settlement in yuan.

In 2022, India’s largest cement producer, UltraTech, bought a shipment of Russian coal in yuan, which had raised alarm among Indian authorities, according to data.

Sources said that in the past few weeks, India’s major oil refineries have been notified by the government in this regard. Meanwhile, the Reserve Bank of India, which handles payments related to India-Russia trade, has also privately confirmed that it will not encourage businessmen to continue using the yuan for trade settlement.

It is worth noting that Indian officials have said that Russia is actually keener to use the yuan for settlement, as it helps it buy various goods from China.

Taken together, the marginalization of the yuan settlement by the Indian government and central bank is not surprising against the backdrop of growing tensions between India and China.












ANBOUND is a multinational independent think tank, specializing in public policy research, incl. economy, urban and industry, geopolitical issues. Est. 1993.