New Delhi: India’s largest cement producer, UltraTech CementThe Russians are importing a cargo of coal and paying using Chinese yuan, a rare payment method that traders say could become more common, according to an Indian customs document reviewed by Reuters.
The document showed UltraTech is bringing in 157,000 tonnes of coal from Russian producer SUEK, which was loaded onto the bulk carrier MV Mangas from the Russian Far East port of Vanino. It cites a June 5 invoice that values the cargo at $25.81 million.
Two trade sources familiar with the matter said the sale of the cargo was arranged by SUEK’s Dubai-based unit, adding that other companies have also placed orders for Russian coal using yuan payments.
The increased use of the yuan to settle payments could help shield Moscow from the effects of Western sanctions imposed on Russia over its invasion of Ukraine, and remove the dominance of the US dollar in global trade and make the currency more international. Beijing’s pressure for
The sources declined to be identified as they are not authorized to speak to the media. UltraTech and SUEK did not respond to a request for comment.
A Singapore-based currency trader said, “This step is significant. I have not heard of any Indian entity paying in yuan for international trade in the last 25 years of my career. It is basically USD (US Dollar) bypassing doing.”
The sale highlights how India has maintained trade ties with Russia for commodities like oil and coal despite Western sanctions. India has long-standing political and security ties with Russia and has refrained from condemning the attack in Ukraine, which Russia calls a “special military operation”.
It was not immediately clear which bank opened the letter of credit for UltraTech and how the transaction with SUEK was conducted. SUEK did not respond to a request for comment.
According to ship-tracking data on Refinitiv Eikon, Mangas is currently at anchor near Kandla port.
India has explored setting up a one-rupee payment mechanism for trade with Russia, but this has not materialised. Chinese businesses have used the yuan in trade settlements with Russia for years.
Two senior Indian bankers said that for Indian business settlement using the yuan, lenders will likely have to send dollars to branches in China or Hong Kong, or tie-ups with Chinese banks.
“If the rupee-yuan-ruble route turns favourable, businesses have every reason and incentive to switch. This is more likely to happen,” said Subhash Chandra Garg, former economic affairs secretary in India’s finance ministry. Is.”
India’s bilateral trade with China, for which companies pay largely in dollars, has flourished in 2020 even after a deadly military conflict between the two, though New Delhi has increased scrutiny on Chinese investments and imports , and have banned some mobile apps over security concerns.
An Indian government official familiar with the matter said the government was aware of payments in yuan.
“The use of the yuan to pay for imports from countries other than China was rare until now, and could increase due to sanctions on Russia,” the official said.
India’s energy imports from Russia have soared in recent weeks as traders offered steep discounts, Reuters reported this month. New Delhi defended its purchase of Russian goods, saying the sudden halt would push up prices and hurt consumers.
Several coal traders based in Russia, Singapore, India and Dubai said the business units of Russian coal traders in Dubai have become active hubs in facilitating deals with India in recent weeks, as Singapore is wary of provoking Western nations. who have imposed sanctions against Russia. ,
A Russian coal trader based in Dubai said the biggest challenge was sending the ruble to Russia.
“You can either take the payment in yuan in Dubai, or receive it in dollars or (Arab Emirates) dhiram and convert it to ruble,” he said, adding that converting yuan to ruble was easy and on other currencies. was liked.
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