India is getting more uncomfortable using China's Yuan to buy Russian oil, sources told Reuters. At least seven oil shipments from Russia have not been paid by India

Although Russian firms are continuing to deliver crude supply, seven cargoes have yet to be paid for, as India's state-owned refiners seek yuan alternatives, the report said.

Part of the reason stems from increased costs that come with using the yuan, as Indian refiners must first convert their rupees into Hong Kong dollars, and then yuan. The mechanism is 2%-3% costlier than using the UAE's dirham, a currency India has shown a preference for.

Added to that, some in India see the yuan's use as a boost for China, which is at geopolitical odds with New Delhi. The two countries continue to dispute over their border, with troops clashing last year.

While India is this year's leading importer of Russia's seaborne oil exports, trade between the two countries has been plagued by currency dilemmas for a while.

Using the rupee in Indian-Russian trade is unlikely to generate any support in Moscow, as the country has already amassed billions of dollars worth of rupees it has been unable to repatriate. The currency stockpile is so large, one former Kremlin official blamed it for the Russian ruble's crash this year.

Though India had previously traded with Russia in US dollars, the fear of Western sanctions helped push its turn to the yuan earlier this year. That's as Moscow's invasion of Ukraine last year has put its exports under international scrutiny.

India has also used the dirham to avoid Western restrictions and trading price caps, but Russian traders have shown strong preference for the Chinese currency.

It has yet to be determined whether India's government is actively withholding the cargo payments — some have been pending since late September. However, New Delhi is skittish about the yuan's use.

"It is not banned and if a private firm has yuan to settle its trade, the government will not stop it, but it will neither encourage nor facilitate such trade," a finance ministry official told Reuters.

Meanwhile, India continues to be a key buyer of Russian crude, importing 1.78 million barrels a day last month, according to Bloomberg. Shipments of oil to India surged 15% in September, having momentarily dipped in August.