India and Russia strengthen bonds
India continues to import nearly 40 per cent of its crude oil requirement from Russia, notwithstanding the fact that the US has imposed secondary sanctions and additional 25 per cent tariffs on India for the same reason. Ironically, China which imports more crude from Russia than India hasn’t got any sanctions/tariffs for doing the same.
“Sanctions are illegal and weaponise the economy,” said Roman Babushkin, minister-counsellor & deputy chief of mission, Embassy of Russia in India, while answering Business India’s queries. “Russia has never sanctioned any country. India is a long and trusted trade partner. We are celebrating 25 years of strategic partnership and 75 years of diplomatic ties”.
Meanwhile, S. Jaishankar, Union minister, external affairs, on a recent visit to Moscow had said he was perplexed by the US tariffs. “We are not the biggest purchasers of Russian oil; that is China,” argued the minister. “We are not the biggest purchasers of LNG, which is the European Union. We are not the country that has the biggest trade surge with Russia after 2022, I think that credit goes to some countries to the South.” Jaishankar added that India is also buying oil from the US, the quantity of which has increased in recent times.
It may be recalled that India had been encouraged by the US to ‘stabilise the world energy market’ by buying Russian oil. Former US Ambassador Eric Garcetti had said at that time that this was ‘the design of the policy’. But, now, the India-US bilateral trade is at a low ebb, with the agreement paused for now and the trade delegation that was to visit India in the third week of August deciding to reschedule their visit for a later date. However, the setback seems to be only temporary, as experts feel that negotiations would restart soon.
President Putin has talked to Prime Minister Narendra Modi twice in a span of a few days in August (first, to wish India on its Independence Day and, then, to apprise him of the meeting he had with President Trump in Alaska). The two leaders are slated to meet in Tianjin, China, during the upcoming Shanghai Co-operation Organisation (SCO) Summit.
“Nearly 90 per cent of the direct bilateral trade between India and Russia is being done in rupee or ruble,” Babushkin added. “We have been trading in local currencies for a few years now. The oil exports from Russia to India are primarily done through private traders. The only two refineries that are directly importing from us are Nayara Energy (which was sanctioned by the US) and Reliance”.
Top priority
India remains a top priority for Russia and the partnership has been elevated to a Special and Privileged Strategic Partnership, informs Sergey Lavrov, Russia’s foreign minister. Russia has been offering over 5 per cent discounts to India on oil.
Bilateral trade between India and Russia was valued at about $65.69 billion in 2023-24. Projections are to reach $100 billion by 2030. There has been a nearly 700 per cent increase in trade turnover in the last five years and India is at present among Russia’s top three trading partners. Oil, coal and petroleum shipments to India are on the increase; Russia is also helping India build high speed trains.
India and Russia have already signed the terms of reference for India-EAEU (Eurasian Economic Union) Free Trade Agreement. EAEU is a five member Russia-led block. There are also chances of Russia, India and China (RIC) talks to resume, on the sidelines of the upcoming SCO Summit.
President Putin is expected to visit India this year for the India-Russia Leaders’ Summit. PM Modi has already extended him an invite. India and Russia also want to improve and increase connectivity initiatives, including the International North South Transport Corridor, the Chennai-Vladivostok Eastern Maritime Corridor and co-operation in the Northern Sea Route.