Indian businesses received massive discount from China to settle their transactions in Yuan, resulting in huge saving on their imports against the backdrop of elevated commodity prices, a number of separate sources revealed to Sputnik.
In particular, India's steel and cement companies have benefitted most from the Chinese offer, according to the sources.
"Indian firms dealing in the cement and steel sector received a 15 percent discount on Chinese Yuan. They found it lucrative, given the Rupee depreciation and settle their transactions in the Chinese currency with Russia," an official in New Delhi told Sputnik.
Steel and cement manufacturers have imported Russian coal at discounted rate while prices remain elevated in other alternative markets such as Indonesia and Australia. India has imported over 8 million tons of Russian coal since March.
“Chinese and Indian currency depreciated against the US dollar by 7 percent this year. The 15 percent discount on Yuan against the prevailing market price of US dollar provided businesses with dual relief as we have also minimized the Rupee depreciation against the dollar,” a trader told Sputnik.
The depreciation of the rupee against the US dollar makes imports costlier for the Indian businesses.
As a result, those dealing in heavy machinery and pharma are also negotiating with China for Yuan settlements for Russian transactions.
Traders said the yuan could be increasingly used to settle payments for Russian supplies.
“China’s intervention in currency market is only challenge before Yuan to remain preferred choice for the settlement. Traders can’t bet on value of Yuan for, let say, six months,” they said.
Meanwhile, India and Russia have been engaged in making permanent arrangements for the Rupee-Ruble payment of their booming bilateral trade.
This year, India’s bilateral trade with Russia increased to nearly double by August compared to the annual trade value of 2021 with oil imports from Russia alone constituting $8.95 billion between April-July.