The Ministry of Commerce and Industry of India recently made public data that illustrates a new high in the nation’s trade relationship with Russia. In the span of five months from April to August in FY 2022-23, the bilateral trade between India and Russia skyrocketed to USD 18,229.03 million.
In comparison, the total annual bilateral trade for 2021-22 stood at $13,124.68 million. In the pre-COVID year of 2019-20, it was USD 10,110.68 million, highlighting the considerable growth in recent times. The escalation in trade has led to Russia becoming India’s seventh-largest trading partner, up from the 25th position in the previous year.
An Unbalanced Trade Relationship
Of the total trade volume of USD 18,229.03 million, Russia’s exports to India account for the lion’s share with USD 17,236.29 million. Meanwhile, India’s exports to Russia amount to only USD 992.73 million, resulting in an unfavorable trade balance of USD 16,243.56 million.
One key finding from the data is that Russia’s slice of India’s total trade has increased to 3.54%. This is a considerable increase from the 1.27% in 2021-22 and a significant jump from the long-standing average of below 2% for the last 25 years.
Factors Driving Trade Surge
The primary reason behind the sudden upsurge in trade comes down to substantially higher imports from Russia, particularly oil and fertilizers. These imports began surging earlier this year, with drastic increases of over 500% in June, July, and August compared to the same months last year.
The Evolution of Indo-Russian Relations
India had a robust strategic, military, economic, and diplomatic relationship with the Soviet Union during the Cold War. Following the dissolution of the Soviet Union, Russia carried forward this close relationship. However, in recent years, especially post-COVID, the relations have seen a decline, primarily due to Russia’s growing closeness with China and Pakistan, causing geopolitical issues for India.
Political and Trade Relations: An Overview
In 2019, Russia awarded PM Narendra Modi the Order of St Andrew the Apostle, the highest state decoration of Russia. The two countries are now seeking to elevate bilateral investment to USD 50 billion and bilateral trade to USD 30 billion by 2025.
Defense and Security Relations
India and Russia maintain an important defense partnership, conducting regular joint military programs and operations. India imports considerable military hardware from Russia, including S-400 Triumf, Kamov Ka-226, T-90S Bhishma, and more.
Nuclear Relations
The Kudankulam Nuclear Power Plant (KKNPP) is being built through the Russia-India Inter-Governmental Agreement. Both countries also collaborate on the Rooppur Nuclear Power Project in Bangladesh.
Russia’s Significance for India
Russia plays a crucial role in India’s foreign relations. Its importance ranges from balancing Chinese aggression and defusing tensions, to emerging sectors of economic engagement involving high technology, mining, and agro-industrial fields.
Moreover, Russia supports India’s candidacy for permanent membership in the United Nations Security Council and the Nuclear Suppliers Group, rendering it strategically significant for India.
Russian Military Exports to India
Over the past 20 years, India has imported arms and weapons worth USD 35 billion from Russia, making it one of the largest arms exporters to India.
Way Forward
Despite the current geopolitical landscape, Russia’s importance as a defense partner for India will continue to be paramount in the decades to come. The two nations are exploring cooperation opportunities with India potentially using Russian-origin equipment and services. In response, Russia has even amended its legislation, allowing its companies to form joint ventures in India. This development is part of an Inter-Governmental Agreement signed in 2019 that needs expedited implementation.