Relations Between India And Russia Will Be A Key Factor For Global Peace

India-Russia military technical cooperation has evolved over time from a buyer-seller framework to one involving joint research and development, co-development and joint production of advanced defence technology and systems

Intensifying trade and economic relations has been identified as a priority area by both India and Russia, which had earlier set the targets of increasing bilateral investment to $50 billion and bilateral trade to $30 billion by 2025.

As per the figures of the Department of Commerce, in FY 2023-24, bilateral trade has reached an all-time high of $ 65.70 billion [Total bilateral merchandise trade for FY 2023-24: e.70 billion; India’s exports: $4.26 billion; and India’s imports: $61.44 billion.

Bilateral trade in services has remained stable in the last five years with trade balance in Russia’s favour. It amounted to $1.021 billion for 2021. Bilateral investments between the two countries remained strong and they surpassed the previous target of $30 billion in 2018, leading to revised target of $50 billion by 2025.

The major bilateral investments by Russia in India are in the oil and gas, petrochemicals, banking, railways and steel sectors, while Indian investments in Russia are mainly in oil and gas and pharmaceuticals sectors.

Bilateral projects include the supply of S-400, licensed production of T-90 tanks and Su-30 MKI, supply of MiG-29 and Kamov helicopters, INS Vikramaditya (formerly Admiral Gorshkov), production of Ak-203 rifles in India and BrahMos missiles. India-Russia military technical cooperation has evolved over time from a buyer-seller framework to one involving joint research and development, co-development and joint production of advanced defence technology and systems.

One of the goals of large-scale sanctions against Russia after the start of the special military operation (SMO) was the isolation of the Russian economy in terms of trade and financing. The task was partly accomplished: the sanctions significantly undermined domestic trade with Western countries. The export of dual-use goods, hundreds of industrial items and various "luxury goods" to Russia is prohibited.

Key components of western imports from Russia were also subject to restrictions: oil and oil products, coal, precious and non-ferrous metals, diamonds, etc. Financial sanctions have largely eliminated the possibility of transactions in US dollars, euros and the other currencies of the initiating countries. Transport restrictions have complicated logistics, and price caps on oil and oil products have indirectly increased the costs of suppliers.

With Moscow’s access to western markets curtailed because of these sanctions, economic relations between India and Russia have surged. As a result, bilateral trade surged from a mere $12 billion before the war to $65 billion in 2023, making India Russia’s second-largest trading partner. As India imports crude oil from Russia, Delhi’s exports of consumer electronics, machinery and mechanical appliances are increasing.

To boost trade, Reserve Bank of India (RBI) has allowed Russian entities to open special Vostro accounts, enabling them to keep their funds in Indian banks. This has resolved a major segment of the payment issues between the two countries.

However, while India is confident that this development is not impacting its relations with Russia, Indian policymakers are concerned that warming relations between Russia and China may have ramifications for New Delhi’s defense ties with Russia if Moscow prioritizes its relationship with Beijing, potentially leaving the Indian armed forces undersupplied.

The U.S., China, Russia, and the European Union (EU) are certain to command huge attention among the big players. One detects much self-confidence in the capital about its ability to cope with the Trump factor, but behind it lies a degree of rising concern because of the measures planned by the incoming U.S. administration on tariffs, trade, tax cuts, and immigration. These could have negative implications for India too.

The trajectory of U.S.-China relations in the coming months will be of special interest to India. Should they come under stress, Washington and Delhi could embrace each other closely, consolidate the Quad further, and prepare for President Trump’s visit to India late this year. 

Further development of the India-China reset, the fruit of persistent diplomacy and flexibility shown by the two sides will be of public interest. Recent parleys between the special representatives and the forthcoming foreign secretary-level meeting may pave the way for more normal exchanges.

Whether the process moves smoothly enough to warrant a bilateral summit between the top leaders will need to be watched. As for India-Russia relations, they have been progressing very well while shifting the focus from legacy issues (read defence supplies) to new domains like energy, manufacturing, and technology.

No doubt, there would be significant challenges arising out of geopolitical and geo-economic shifts. Evolution of relations among big powers, including the US, China, Russia and India, will have a major impact on global stability.

Given their close and trouble-free ties, India and Russia are well placed to make a positive contribution to global peace and development.