According to India’s Minister of External Affairs, Mr. S. Jaishankar, India and Russia will accomplish a remarkable $100 billion milestone well before 2030 was planned. The remarks were made recently and focused on the rapid expansion in trade relations between both countries. Moderate hopes arise from increased exports and imports, most of which are energy, commodities, and pharmaceutical-related.
Surge in Bilateral Trade
Bilateral trade between India and Russia has risen nicely in the past two years: 2021, more or less $13 billion, while in 2023, after more than $50 million.
India’s reliance on Russian oil, fertilizers, and coal certainly bore the brunt of this increase since those were actively geared toward compensating Western countries for breaking off relations with Russia because of geopolitical standoffs.
India has benefited from a significant discount on Russian oil, making it one of the biggest clients for Russian crude in 2023. It also wields further clout in trade relations.
In this transition, the Russian Ambassador to India, D. Alipov, characterized the improved economic activity, noting that both countries are introducing non-energy-related diversification in trade.
India and Russia: Navigating Trade Challenges
The new direction also has room for sectors like defense, pharmaceutical, and agriculture, in which India exports significant quantities to Russia. It should be noted here that Indian pharma companies have augmented their exports to the Russian market; they have been called into action against Western sanctions for reducing supplies in the Russian market.
However, further expanding bilateral trade has challenges in the framework of broader perspectives. First, there is always an inflexible trade question of a sustaining nature. India is heavily importing from Russia.
While India’s imports have seen a rise in trade, it still faces a big gap. Nonetheless, Indian officials are cautiously optimistic about a narrowing prospect for this gap as they seek to bolster exports in IT Services, machinery, and textiles.
Besides, both nations are seeking new mechanisms for smooth financial transfers given the international sanctions imposed on Russia. The negotiations on creating an alternative payment system, possibly using local currencies, are in their initial stages.
This would help circumscribe SWIFT-related restrictions and allow seamless transactions for Indian and Russian businesses.
Future Prospects and Strategic Moves
The goal of $100 billion in trade by 2030 was laid on a strategic vision to consolidate economic ties. However, the speed of trade development has enabled this goal to be reached much sooner.
Jaishankar noted that governments expect new policy measures related to this trajectory to be implemented, including investment promotion in each other’s countries and opening up the pathway for trade through the International North-South Transport Corridor (INSTC).
Deepening their economic engagement strengthens India and Russia’s wider geopolitics strategies, mainly because of Western sanctions on Russia. India sees this deepening of ties with Russia as an excellent opportunity to diversify energy imports and reduce reliance on the Middle East oil sphere.
For Russia, India remains a significant economic partner that helps offset some sanction-induced shocks through alternate market viability for its exports.
While trade is significant, the two countries plan to invest in infrastructure, technology, and defense. Such diversified strategies support and enhance the momentum towards passing the $100 billion mark, much before the initial 2030 deadline.
