Cracks are developing between the top three BRICS members—India, China, and Russia—over payment options for Russian crude oil. Leading oil refiners in Russia are demanding developing countries pay in the Chinese Yuan or the Russian Ruble only. While India recently paid the Chinese Yuan to procure oil from Russia, the country is now refusing to put the Yuan ahead of the US dollar. BRICS member India is uncomfortable with paying the Chinese Yuan for oil and prefers to settle trade either in the US dollar or the rupee.
An executive from the state-run Indian Oil Company (IOC) said that five cargoes have been delayed as India refuses to pay the Chinese yuan, Bloomberg reported. The three BRICS members are in the crosshairs over currency options, and India prefers to pay the US dollar over the Yuan.
India is upset that the Yuan is gaining prominence as Russia and China are using BRICS to further their narrative. The Indian government wants to pay the US dollar, rupee, or dirhams for oil and not the Chinese yuan.
Popularising the Chinese Yuan at the expense of the rupee hurts India’s efforts to internationalise its local currency. The Modi government does not want to give the Yuan a boost and aims to strengthen the rupee first.
India believes that both China and Russia are using BRICS as a stepping stone to make their local currencies stronger. The development puts a wedge in the BRICS bloc as distrust among India and China is growing. BRICS members India and China are at loggerheads over land disputes on the border.
The Modi administration fears that paying in the Chinese Yuan will make the government look weaker during the upcoming elections. Therefore, India is staying away from using the Chinese yuan as payment and wants to continue with the US dollar.