Indian Prime Minister Narendra Modi is set to make an official visit to Russia on July 8, despite facing domestic political challenges. Despite his recent re-election, Modi now leads a coalition government with a reduced majority and a lower personal vote share compared to his previous terms. This weakened political position may impact his ability to engage in effective diplomacy, as robust domestic support is crucial for securing concessions and making long-term agreements with foreign leaders.
Following his attendance at the G7 meeting as an observer, Modi’s trip to Russia aims to usher in a new phase of bilateral partnership. This visit aligns with Russia’s strategic pivot towards the East, strengthening ties with Asian powers.
India aspires to position itself as a leader in the Global South, drawing on its historical legacy. While Prime Minister Modi benefits from the Non-Aligned Movement (NAM) policy established by India’s first Prime Minister, Jawaharlal Nehru, and furthered by Indira Gandhi, he faces challenges in matching their level of global influence. Nevertheless, the enduring impact of NAM continues to shape India’s foreign policy approach.
The NAM policy enables India to maintain engagement with Russia despite increasing Western sanctions. This approach allows India to balance its relationships, maintaining strong economic ties with Western nations while pursuing an independent foreign policy. Drawing on its historical role as a mediator, India may attempt to facilitate the resolution of the Ukraine conflict, similar to its successful efforts during the Korean Peninsula crisis in 1951.
Since the imposition of sanctions on Russia in 2022, India has emerged as a major purchaser of Russian oil. Indian refineries now process approximately 2 million barrels of Russian oil daily, accounting for up to 40% of total import supplies. This arrangement allows India to sell processed products globally, including to European nations that have stopped direct fuel purchases from Russia. Additionally, Russia remains India’s primary supplier of military equipment, providing over a third of India’s arms imports. A recent agreement between the two nations facilitates mutual troop deployment and access to military facilities, enhancing strategic cooperation without implying direct military engagement in conflicts.
Recent challenges in rupee-based settlements between Russia and India have been largely resolved. The majority of previously unused funds, amounting to about half a billion US dollars, are now being allocated towards investments in Indian firms and infrastructure projects. The proposed BRICS Bridge cross-border payment system aims to facilitate currency exchanges among member nations, potentially eliminating the need for US dollar settlements and addressing currency imbalance issues.
Russian exports to India are dominated by raw materials, with oil, chemical fertilizers, and coal accounting for at least 85% of the total value. This trade pattern is largely driven by price reductions offered by Russian suppliers in response to Western sanctions. There has been notable growth in exports of metals like aluminum and titanium, as well as a significant increase in diamond imports by India from Russia.
Agricultural products form another significant component of Russian exports to India. In 2023, Russian agricultural exports to India experienced a remarkable 55% increase compared to the previous year. The bulk of these exports consists of vegetable oils and pulse flour. India has expressed interest in expanding imports to include poultry, wheat, and dairy products from Russia.
A significant trade imbalance exists between Russia and India, with Russian exports surpassing imports from India by approximately 15-fold. India’s exclusion from duty-free and unrestricted export privileges in the Eurasian Economic Union (EAEU) since 2022 has raised political concerns and hindered the development of equitable trade relations between India and EAEU countries.
The IT sector represents a growing area of collaboration between Russia and India. Currently, 16 Russian IT firms operate in India through a channel established by the Russia-India Special Interest Group RUSSOFT. The proportion of Russian companies operating or planning to enter the Indian market has significantly increased from 3.9% to 11.8% between 2023 and 2024. These collaborations often involve the establishment of joint ventures to comply with Indian regulations.
The TAPI (Turkmenistan – Afghanistan – Pakistan – India) gas pipeline project, with an annual capacity exceeding 30 billion cubic meters, is showing signs of revival. After being suspended in Afghanistan in the late 2010s, the project has gained renewed interest from all parties involved. Recent announcements from Turkmenistan, Afghanistan, Pakistan, and India indicate progress in planning and construction efforts. The completed pipeline would allocate 14 billion cubic meters each to Pakistan and India, with Afghanistan receiving up to 5 billion cubic meters.
The forthcoming visit of PM Modi to Russia highlights India’s complex strategy in global diplomacy. As it maintains a delicate equilibrium between its traditional non-aligned position and current geopolitical circumstances, the visit signifies more than just a two-sided interaction but rather an expression of India’s wider approach to an ever-more diverse global power structure.