Key Takeaways:
India-Russia relations continue to be amicable, with agreements to enhance trade and cooperation in key sectors like energy, trade, medicine and national defence.
Goals set for bilateral trade to reach $30 billion for 2025, and $100 billion by 2030, addressing trade imbalance between both nations.
KSG assesses that the Indo-Russian ‘special strategic partnership’ is highly likely to increase trade and cooperation into the medium-long-term as set out by the post-summit joint statement, maintaining tense but robust regional security by balancing against China.
India’s sustained trade and oil imports from Russia will continue to support Russia’s military engagement in Ukraine.
KSG does not assess that India is ‘swinging more towards Russia’ - a continuous worry in Western capitals. Instead, this is a continuation of the long held non-alignment strategy. This is unlikely to change out until 2030.
On July 8, 2024, Indian Prime Minister Narendra Modi landed in Russia for the 22nd Annual India-Russia Summit. This was the first India-Russia summit to take place since the invasion of Ukraine in 2022, and highlights India’s continued neutrality between the West and Russia.
At the summit, Modi and Russian President Vladimir Putin reaffirmed their mutual desire to strengthen the Indo-Russian bilateral relationship. Putin awarded Modi the “Order of Saint Andrew the Apostle” to signify Modi’s contribution to the development of the Special and Privileged Strategic Partnership between India and Russia.
Their joint statement concluded that a foreign policy priority for both nations was to increase bilateral cooperation. Eight key sectors were subsequently identified:
National Defence & Military Cooperation
Trade and Economic Partnership
Energy Partnership (including cooperation in the Russian Far East & Arctic)
Civil Nuclear and Space Technology
Science & Technology, including
Coordinated development of medical institutions, equipment and medicines
Cultural Cooperation, Tourism & Exchange
Counterterrorism
Multilateral Cooperation, including in the UN Fora
Trade and Economic Partnership
New bilateral trade targets of $30 billion for 2025, and $100 billion by 2030 were set. Modi and Putin also agreed to heighten Indian exports to Russia, through new technological and investment partnerships. This is owed to Indian exports to Russia amounting to $4.26 billion for the FY2023-24, while their imports from Russia total $61.44 billion.
Both leaders also reaffirmed their desire for a Free Trade Agreement between India and the Eurasian Economic Union to eliminate non-tariff/tariff barriers in trade, touching upon the possibility of a bilateral free-trade agreement for services and investments. KSG assesses that the sustained economic partnership between the two nations is likely to present increased investment and business opportunities in the sectors of natural resources, green technology and pharmaceuticals in the medium-long term.
Furthermore, KSG assesses that an enhanced India-Russia economic corridor is likely to improve Russia’s economic performance and trade relations, and subsequently drive more economic collaboration between Russia and China to improve their bilateral relations. Russia, therefore, is unlikely to face the economic isolation that Western nations desire, likely leading to negotiations on Ukraine to remain stagnant.
Energy
The energy market is key to India-Russia bilateral trade. Russia has assisted India with the construction of nuclear plants in the southern parts of the country, and continued nuclear cooperation is high on both Modi and Putin’s agendas.
Their joint statement on the Development of Strategic Areas for Economic Cooperation up to 2030 includes a section dedicated to the facilitation of increased cooperation in the energy sector, including:
Nuclear energy
Oil refining
Petrochemicals
Energy infrastructure, technologies and equipment
International energy security, and global energy transition
KSG assesses that further cooperation on energy will create new opportunities for infrastructure construction and trade efficiency, like the streamlining of supply chains. This is likely to enhance bilateral trade, allowing India to increase exports in information technology and pharmaceuticals, while Russia is likely to continue exporting oil, gas and other raw materials. These opportunities are unlikely to be made available to Western suppliers.
National Defence and Multilateralism
Both sides have been long-term allies, balancing against China in the region. At the summit, they showcased their alignment by collectively calling for UNSC reforms to reflect “contemporary global realities,” in the name of effectiveness and efficiency for international peace and security. Russia reiterated its support for India’s permanent membership to the UNSC, further strengthening bilateral ties.
An important geopolitical outcome of improved Indo-Russian relations is the counterbalancing of China in the region, and economically, is the opening up of the energy market for business, investment and trade opportunities.
Looking Forward
KSG assesses that amicable relations between India and Russia are highly likely to continue into the medium-long-term, and therefore it is expected that:
The current state of regional security will be maintained.
Both will collaborate to ensure China is balanced against, preventing the Chinese domination of Asian markets short-term.
India’s reassurance of neutrality and continued support for the expansion of bilateral relations will likely continue to undermine the West’s strategy to isolate Russia from world markets.
India’s sustained trade and oil imports from Russia will continue to support Russia’s military engagement in Ukraine. KSG assesses that it is highly likely that as the war continues into the medium-term, EU countries will be forced to continue to look elsewhere for oil and gas resources as trade with Russia will likely continue to be sanctioned. Demand for oil and gas from alternative regions like the Middle East or Norway is likely to increase.
KSG assesses that Indian diplomatic engagements also demonstrate its desire to become less reliant on the West (or any one single region) for trade and energy sources, indicating opportunities for increased trade and business with other partners from South or South East Asia.
Overall, KSG does not assess that India is ‘swinging more towards Russia’ - a continuous worry in Western capitals. Instead, this is a continuation of the long held non-alignment strategy. This is unlikely to change out until 2030 given the significant economic and defence benefits it brings India.
By Mehr Lamba, South Asia Analyst