MC EXPLAINER The yuan may be China’s, but here's how India is using it to solve its Russian oil problem

India begins partial oil payments to Russia in Chinese yuan, confirming early signs of BRICS’ push to bypass the US dollar.

Something subtle but seismic is happening in the way India pays for its oil.

Russia’s Deputy Prime Minister Alexander Novak confirmed this week that India has started settling a small part of its oil imports from Russia in Chinese yuan, instead of the rupee or dollar. It’s a minor accounting tweak on paper, but one with major geopolitical undertones.

Novak told Russia’s state-run TASS news agency on October 15 that while yuan-based transactions had begun, the share was still 'small' and that most payments continued in Russian roubles.

That small shift, though, hints at something much larger: a gradual rewiring of global oil trade away from the dollar, and an early test of how far BRICS nations, Brazil, Russia, India, China, South Africa, are willing to go in their de-dollarisation drive.

Why Russia and India are turning to the yuan

For years, Russian exporters have resisted rupee payments, calling them 'trapped money,' billions stuck in Indian banks, hard to repatriate or convert. The rupee’s limited convertibility made it a poor option for Moscow, even as India’s imports of discounted Russian oil surged.

So, enter the yuan. It’s not ideal for India, but it’s convertible, liquid, and widely accepted across Asia’s trading network. Using China’s currency gives Russia more flexibility in managing reserves and paying for imports, while allowing India to keep buying Russian crude despite Western financial sanctions.

Industry sources told Reuters that some Indian state refiners have already made yuan payments for two to three Russian cargoes, and traders are increasingly requesting yuan settlements to avoid multi-step conversions through UAE dirhams or dollars.

Novak himself acknowledged this emerging pattern, saying: “The share of such settlements is still small, but the mechanism has started.”

Translation: the yuan trade is no longer hypothetical. It’s happening, just not at full throttle yet.

The BRICS factor: testing the de-dollarisation playbook

This new payment route ties directly into the BRICS bloc’s broader ambition to build an alternative to the dollar-dominated global system.

By experimenting with local currencies, rupee, ruble, and now yuan, the group is slowly creating a parallel circuit for trade settlements. It’s a long way from replacing the dollar, but each small transaction helps carve new pathways beyond Western financial institutions like SWIFT.

In short, India’s yuan payments are a pilot, not a policy shift yet, but a test run in BRICS’ long-term effort to 'multipolarise' global finance.

India’s balancing act: pragmatism over politics

For India, this isn’t about taking sides. It’s about keeping the oil flowing, at the best price and with minimal friction.

When US President Donald Trump claimed this week that Prime Minister Narendra Modi had assured him India would stop buying oil from Russia, New Delhi didn’t flinch.

The Ministry of External Affairs (MEA) responded firmly, reiterating that India’s import policies are guided entirely by consumer interests and energy security, not foreign pressure.

“Ensuring stable energy prices and secured supplies have been the twin goals of our energy policy,” said MEA spokesperson Randhir Jaiswal.

“Our import decisions are guided entirely by this objective.”

Russia, too, sounded unfazed. Novak said Moscow was 'confident' its energy partnership with India would continue, describing it as economically 'advantageous and practical.'

The data: how big is the Russia-India oil link?

Let’s put the numbers in perspective.

According to Reuters, India now imports over 1.7 million barrels per day of Russian crude, accounting for around 35–40 percent of its total imports, up from less than 1 percent before the Ukraine war.

In September 2025 alone, India bought €2.5 billion worth of Russian oil, making it Moscow’s second-largest buyer after China.

Some Indian refiners are reportedly considering modest cuts to Russian oil purchases amid payment complications, but there’s no sign of an abrupt pullback.

These figures explain why payment flexibility matters so much. If the dollar route is blocked by sanctions, and the rupee route is stuck, the yuan becomes a convenient middle ground, even if politically awkward.

Uncertainties and limits: what we don’t know yet

While the yuan shift is real, there are caveats worth noting:

• Novak didn’t specify how much of India’s oil trade is now in yuan, only that the share is 'small.'
• The Indian government hasn’t officially confirmed or institutionalised yuan settlements.
• The system may remain transactional and temporary, rather than a permanent shift.
• It’s unclear whether private refiners like Reliance or Nayara are part of the yuan trade or if it’s limited to state refiners.

India’s yuan payments for Russian oil are tiny in volume but huge in significance.

They show how countries are improvising under sanctions, testing new trade systems, and slowly redrawing the financial map that’s been dollar-dominated for nearly eight decades.