Can Putin Rely on India to Boost Russia’s War Economy?

Historical Context: The relationship between India and Russia has deep historical roots, dating back to the Cold War era when the Soviet Union and India established a strategic partnership for defense and trade. This partnership continued even after the dissolution of the Soviet Union, with significant cooperation in various sectors, particularly defense. In 2000, Vladimir Putin, then Russia’s Prime Minister, signed a new declaration of cooperation with India, further solidifying the ties between the two nations.

Current Scenario: Following Russia’s invasion of Ukraine, India’s imports of Russian oil surged dramatically. As Prime Minister Narendra Modi prepares for talks with President Vladimir Putin, India aims to maintain a neutral stance while boosting trade with Russia.

India faced criticism from Western nations for increasing its imports of Russian fossil fuels amidst the Ukraine conflict. Despite this, India justified its actions by emphasizing its long-standing “stable and friendly” relations with Moscow and its heavy reliance on imported oil. In 2022, India’s oil imports from Russia increased tenfold and doubled again the following year due to significant price discounts. Additionally, India’s coal imports from Russia tripled over the same period.

As Modi prepares to meet Putin in Moscow, the Russian President seeks to further enhance trade with India to support Russia’s economy, which is heavily reliant on commodities, and to mitigate the impact of Western sanctions. Kremlin spokesman Dmitry Peskov highlighted the mutual political will to boost trade and economic cooperation, alongside discussions on global and regional security issues.

India, however, must navigate a delicate path, balancing its strong ties with the West, seeking new trade opportunities with Moscow, and maintaining a neutral position on the Ukraine conflict.

India-Russia Relations: During the Cold War, the Soviet Union and India developed a strategic partnership that continued post-communism. In 2000, Putin signed a new cooperation declaration with New Delhi. India has been a major market for the Russian defense industry, with Moscow supplying 65% of India’s weapons purchases over the past two decades, amounting to over $60 billion.

After the Ukraine invasion, Russia sought to deepen its relations with India and China as a counterbalance to the West. The Kremlin offered India substantial discounts on oil, coal, and fertilizers to bolster its finances for the war effort. Consequently, India became a significant export market for Russian fossil fuels, with Russian crude oil deliveries to India reaching a record 2.1 million barrels per day in April.

Bilateral trade between India and Russia hit a record high of nearly $65.7 billion last year, with India importing $61.4 billion worth of goods, including oil, fertilizers, precious stones, and metals.

Concerns and Challenges: While the West has limited its criticism of India’s cheap oil deals with Russia, New Delhi’s reliance on Moscow for weapons remains a major concern for the US and Europe. India’s nuanced approach to the Russia-Ukraine conflict has allowed it to maintain good relations with both Moscow and the West. However, structural challenges and the impact of Western sanctions on Russia’s arms sector have hindered the reinvigoration of economic ties.

India has faced issues with previous arms deals with Russia, including delays and cost overruns. Despite remaining the leading destination for Russian arms transfers between 2017 and 2022, Russia’s share of defense exports to India dropped from 65% to 36% during this period. French and German arms suppliers have benefited from India’s shift in strategy.

Future Prospects: Modi’s visit to Moscow underscores the importance India places on its relationship with Russia. As a growing world power, India aims to prioritize its strategic interests while balancing relations with the West, Russia, and China. Although new arms deals with Russia may be limited, Modi’s “Made in India” initiative could see Russia providing more raw materials and parts for domestic Indian arms production.

Russia is also keen to expand the International North-South Transport Corridor (INSTC), a project connecting Russia to India via Iran. The completion of the Chennai-Vladivostok maritime corridor, proposed in 2019, is another priority. This sea route could secure flows of Russian energy and raw materials to India, reducing shipping times significantly.

Summary:

• Historical Ties: India and Russia have a long-standing strategic partnership dating back to the Cold War.
• Increased Trade: India’s imports of Russian oil and coal surged following the Ukraine invasion.
• Neutral Stance: India aims to maintain neutrality while boosting trade with Russia.
• Defense Cooperation: India has been a major market for Russian defense exports, though recent challenges have emerged.
• Future Prospects: Modi’s visit to Moscow highlights the importance of India-Russia relations, with potential for increased cooperation in trade and manufacturing.