Can Putin rely on India to boost Russia’s war economy? – DW – 04.07.2024

India has faced heavy criticism in the West for importing more Russian fossil fuels amid Moscow’s large-scale invasion of Ukraine. The world’s third-largest oil importer saw its shipments from Russia increase tenfold in 2022 and double again last year, thanks to steep discounts. India’s coal imports from Russia rose threefold over the same two-year period.

Despite accusations that the country was financing Putin’s war machine, New Delhi justified the increase in funds by citing India’s traditionally “stable and friendly” relations with Moscow and the country’s heavy dependence on oil imports.

As Indian Prime Minister Narendra Modi prepares to meet his Russian counterpart Vladimir Putin in Moscow next week, Putin will seek to further boost trade with the South Asian power to support Russia’s commodity-dependent economy and mitigate the impact of Western sanctions over the Ukraine war.

Announcing the talks, Kremlin spokesman Dmitry Peskov said that in addition to cooperation on global and regional security issues, there was also a “mutual political will” to strengthen trade and economic cooperation.

India, on the other hand, has a delicate path to follow as it seeks to maintain strong ties with the West, seek new trade relations with Moscow and maintain a neutral position in the conflict.

DW takes a look at the current state of trade relations between India and Russia and asks what the two leaders could agree on next.

How strong are the relations between India and Russia?

During the Cold War, the Soviet Union and India built a strategic partnership in defense and trade that continued even after the end of communism. In 2000, then Russian Prime Minister Putin signed a new declaration of cooperation with New Delhi.

India is an important market for the Russian arms industry – until recently, it was the largest. Over the past two decades, Moscow has supplied 65 percent of India’s arms purchases, totaling more than 60 billion dollars (55.8 billion euros), according to the Stockholm Peace Research Institute.

After Russian troops invaded Ukraine, Moscow sought to deepen its relations with India and China to counterbalance the West. The Kremlin offered New Delhi huge discounts on oil, coal and fertilizer supplies to bolster the country’s war finances.

As a result, India emerged as a key export market for Russian fossil fuels, which were looking for new destinations following Western sanctions. In April, for example, Russian crude oil shipments to India rose to a new record of 2.1 million barrels per day (b/d), according to S&P Global.

Bilateral trade between the two countries reached a record high of nearly $65.7 billion last year, figures from India’s commerce ministry show. However, the trade is heavily skewed in Russia’s favor, with India importing $61.4 billion worth of goods, including oil, fertilizers, gems and metals.

“We have long looked at Russia from a political or security perspective,” Indian External Affairs Minister S. Jaishankar said at an industry conference in May. “As the country turns east, new economic opportunities are emerging… the rise in our trade and the new areas of cooperation should not be seen as a temporary phenomenon.”

What concerns does New Delhi have about relations with Moscow?

While the West has limited its criticism of India over its cheap oil deal with Russia, New Delhi’s historical dependence on Moscow for weapons is a major concern for the United States and Europe.

“New Delhi has demonstrated a nuanced approach in managing the Russia-Ukraine conflict while maintaining good relations with Moscow and the West,” Dr. Aleksei Zakharov, a researcher on Indian foreign policy at the French Institute of International Relations (Ifri), wrote in an article last month.

Zakharov wrote of “structural challenges” that he said “still appear to prevent both sides from reviving economic relations,” adding that defense cooperation between Russia and India is currently “in limbo,” partly because the Ukraine war and Western sanctions have hampered the Russian defense sector.

India has had several negative experiences in previous deals with the Russian defence industry. A 2004 deal to buy a Soviet-era aircraft carrier, which was modernised and upgraded by Russia, was criticised for long delays and a doubling of costs.

In 2013, the explosion and sinking of a Russian-built submarine, which killed 18 crew members, put further pressure on the Indian leadership regarding its defense cooperation with Moscow.

The Indian military is currently waiting for two of five Russian-made S-400 air defense systems and frigates that Russia had promised to deliver under contracts signed in 2018, local media reported in April.

While India remained the leading destination for arms deliveries from Moscow between 2017 and 2022, Russia’s share of arms exports to the South Asian country fell from 65% to 36% over the same period, SIPRI data show.

French and German arms suppliers have benefited from New Delhi’s change of strategy, while Indian politicians are reluctant to break Western sanctions against Moscow by signing new contracts with the Kremlin.

Is more trade between India and Russia possible?

Modi’s visit to Moscow – his second foreign trip since his re-election earlier this month – is a sign of how important India still is to relations with the Kremlin. As a growing global power, New Delhi is keen to prioritise its own strategic interests while balancing relations with the West, Russia and China.

While New Delhi called for “dialogue and diplomacy” to end the war in Ukraine, the Indian representative at the recent Ukraine peace summit in Switzerland did not sign a joint communiqué calling for respect for Ukraine’s territorial integrity in any possible peace agreement.

“On the surface, it may seem that India’s neutrality (in the Ukraine war) has enabled strengthening of bilateral relations with Moscow,” Zahkarov said in his recent article. “However, a closer look reveals that India has become more cautious in its relations with Russia… (therefore) maintaining dialogue and playing it safe may be more important for both sides than making new agreements.”

While new agreements to buy Russian weapons are likely to remain limited, Modi’s “Made in India” initiative, which aims to promote the country as a manufacturing location, could lead to Russia supplying more raw materials and parts for Indian weapons production.

Russia is also interested in developing the International North-South Transport Corridor (INSTC), a road, sea and rail project that connects Russia to India via Iran. Russia shipped the first shipment of coal through the INSTC last month.

The project has been in the works for over two decades, and the constraints imposed on Russia by Western sanctions have made the INSTC one of the Kremlin’s top trade priorities.

Another project that has gained urgency is the completion of the Chennai-Vladivostok sea corridor. The 10,300-kilometer (5,600 nautical mile) sea route from Russia’s Far East, first proposed in 2019, could help ensure India’s supply of Russian energy and other raw materials.

The proposed corridor is expected to reduce transport times from 40 to 24 days compared to the existing route through the Suez Canal.

Edited by: Ashutosh Pandey