In December 2023 and January 2024, India did not receive Russia** because initially Russia insisted on using RMB for settlement. After two months of stalemate, India has found a way to bypass the renminbi settlement. Around February 16, India finally resumed importing Russian Sokol oil and adopted the method of settlement in UAE dirhams, which was agreed with Russia.
As the most important energy and chemical raw material in contemporary society, oil is vital to the country's economy. The main reason why India was able to insist on not receiving Russia** for two months is that the Russian side initially insisted on using RMB for settlement, and India** finally abandoned this payment method for various reasons, resulting in the interruption of Russian-Indian ** transactions.
When Russia's invasion of Ukraine triggered Western sanctions against Russia in 2022, India keenly saw an opportunity to become a middleman. Because Russia needed foreign exchange from the international market to buy supplies needed to sustain the war, India became a middleman that could buy Russia** at a low price and make a higher profit when it changed hands.
India receives large quantities of Russia** every day, processes them at local refineries, and then sells them to the United States or Europe at a low price, achieving a huge profit. India initially paid in rupees, and due to the rupee's low reputation in the international **, Russia could only buy supplies in Indian currency.
India found itself without sufficient renminbi reserves to pay as Russia informed India that it must settle in yuan. Eventually, India and Russia agreed to settle in UAE dirhams, setting the stage for the resumption of trading.
Russia's move aims to replace the dollar, euro and yen reserves with the renminbi, while weakening the dollar's position in global oil trading. For India, it is still difficult to settle in dirhams, because India's ** deficit with China makes it lack sufficient foreign exchange reserves in the renminbi.
This change in cooperation demonstrates the insight of India's top leadership into changes in the international political economy. India's backwardness in hardware manufacturing has prevented it from playing a more dominant role, and has become more of a middleman between China and Russia.
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