Editor’s Note
This analysis argues that the longstanding India-Russia partnership must evolve beyond a transactional framework into a deeper strategic alignment, highlighting historical ties and shared geopolitical objectives as the foundation for this necessary shift.
India-Russia relations require an ideal shift away from a “seller-buyer” relationship towards a more strategic foundation. Since 2010, the special and privileged strategic partnership between India and Russia has developed on a solid foundation of a strong history and has been shaped through political necessity. Russia supported India’s membership in the Shanghai Cooperation Organisation (SCO) and appealed for reforms in the United Nations Security Council and India’s inclusion in it. In this way, Russia broadly acknowledged India’s growing role in the international arena.
The complex interplay between capability and desire in Russia’s foreign policy became noticeably evident shortly after the events of February 24 two years ago, i.e., the start of the war between Russia and Ukraine. In the past decade, Russia’s ‘Turn to the East’ policy indicated its desire to reshape its economic relations with Asian countries to balance economic engagement with the European Union (EU). However, the pace and scope of this shift were largely determined by the ability to maintain economic relations with Western countries, which would be convenient for all parties. The conflict in Ukraine, acting as a decisive turning point, has prompted Russia’s political elites to diversify and turn their gaze towards India. In the past, both India and Russia were sluggish in converting political closeness into solid economic cooperation, and bilateral trade was lukewarm. Apart from traditional cooperation in the military and energy sectors, business between Russia and India was stagnant, and both countries were quite hesitant to take decisive steps towards each other.
Despite favorable conditions for firm confidence in commercial relations these days, the result has been a stalemate in long-awaited strategic projects, such as the International North-South Transport Corridor (INSTC) and the Free Trade Agreement (FTA) between India and the Eurasian Economic Union (EAEU), due to the pervasive apprehension everywhere amid political and economic uncertainties. These circumstances significantly limit the scope for moving forward skillfully.
The developments in the current decade have led to an increase in voices advocating for self-reliance and import substitution. The COVID-19 pandemic caused disruptions in supply chains, particularly in the production of high-demand electronic goods. This boosted protectionist sentiments. Immediately following this, tensions in Russia’s relations with Western countries, along with the conflict in Ukraine, resulted in a short-term but very sharp spike in energy prices. Additionally, fertilizer prices also affected the global market for agricultural products, particularly corn, barley, wheat, and sunflower oil. Concurrently, the emerging events became a litmus test for the strength of India-Russia economic relations. In 2019, both countries set an ambitious target to increase the level of bilateral trade from USD 10 billion to USD 30 billion by the end of 2025. However, in the financial year 2022-23 itself, bilateral trade surpassed this target, with total trade reaching USD 49 billion. The reason was a six-fold increase in imports of Russian oil at discounted rates. Oil’s contribution to bilateral trade was 62.8 percent, and the share of Russian oil in India’s total oil imports was 19.2 percent. Data so far indicates that this share will be exceeded in the coming year. Between April and December 2023, India purchased USD 34.4 billion worth of Russian oil, which is about 34 percent of total crude oil imports.
The strong performance in bilateral trade is a testament to the extraordinary adaptability in dealing with adverse circumstances and economic sanctions (secondary sanctions).