Russia-India economic relations and deals

Russia's triumph in India shocks US, by Simon Watkins for Oilprice.com. 14.12.2021.

Russia last week announced a major new energy cooperation deal with India that threatens the very core of the US’s fightback strategy against Beijing’s and Moscow’s expansionism in the Middle East and beyond.

The main hydrocarbons deal will be for Russia, via oil giant Rosneft, to supply almost 15 million barrels of crude to Indian Oil, by the end of 2022. Given the massive geopolitical ramifications of any sizeable oil deal, it was entirely legitimate for Igor Sechin, Rosneft chief executive officer to say of the deal that: “The signing of a new oil supply contract confirms the strategic nature of the long-term partnership between Rosneft and Indian Oil.”

The deal takes on even more significance as it was just one part of 28 investment deals between Russia and India signed during the very recent visit of Putin himself to Indian Prime Minister, Narendra Modi. These covered a broad range of subjects, including not just oil, gas, and petrochemicals, steel, and shipbuilding, but also military matters. The opportunities for bleed-through military elements to appear in the oil and gas projects agreed between Russia and India are bad enough from the US perspective. Rosneft’s oil deliveries will be shipped through the Russian Black Sea port of Novorossiisk, with off-loading facilities in India to be built out when required.

Putin highlighted: “Both sides reaffirmed their commitment to increasing Russian crude oil production under long-term contracts at preferential prices and increasing LNG [liquefied natural gas] imports to India with the possible use of the Northern Sea Route for energy supplies.” Specifically, added Modi: “We have set a target of US$30 billion in trade and US$50 billion in investment by 2025.”

Bad though these deals are from the US’s perspective of seeing Russia being able to leverage them into military opportunities in India, matters became a whole lot worse as the meetings between Putin and Modi went on.

As it now stands, a joint statement from Russia and India said: “[We have] reiterated their intention to strengthen defence cooperation, including in the joint development of production of military equipment.”

Specifically, according to further official statements from one or both sides, India will produce at least 600,000 Kalashnikov assault rifles and, even more disturbing for the US, India’s Foreign Secretary, Harsh Vardhan Shringla, said that a 2018 contract for the S-400 air defence missile systems is now being implemented.

The scope and scale of this coup by Putin in India is as dramatic as it is unexpected, and runs contrary to the US’s expectations of how well its contra-China/Russia strategy in the Middle East had been going. The US fightback against China’s expansion of influence in the Middle East was founded principally upon the ‘relationship normalisation’ deals that have been made with the UAE, Bahrain, and Israel, and on India’s role as a counterbalance to China in Asia and as a major global buyer of oil and gas, as analysed in depth in my new book on the global oil markets.

The US’s idea of India as a new backstop bid for oil in Asia was bolstered by the release of a report in the first quarter of 2021 from the International Energy Agency that showed that India will make up the biggest share of energy demand growth at 25% over the next two decades, as it overtakes the European Union as the world’s third-biggest energy consumer by 2030.

The report added that India’s energy consumption is expected to nearly double as the nation’s GDP expands to an estimated $8.6 trillion by 2040 under its current national policy scenario. This is underpinned by a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040, according to the IEA. The agency added that the country’s growing energy needs will make it more reliant on fossil fuel imports as its domestic oil and gas production has been stagnant for years despite government policies to promote petroleum exploration and production and renewable energy.

Politically as well, an incident on 15 June 2020 between military units of China and India gave the US the belief that India’s more aggressive stance against its neighbour might be of use to it, not just in its Middle East strategy but also in its efforts to keep a check on China’s increasingly aggressive moves in the Asia-Pacific region. Specifically, the June 2020 clash between China and India that occurred in the disputed territory of the Galwan Valley in the Himalayas reflected a much greater change in the core relationship between the two countries than the relatively small number of casualties might have implied. It marked a new ‘push back’ strategy from India against China’s policy of seeking to increase its economic and military alliances from Asia through the Middle East and into Southern Europe, in line with its multi-layered multi-generational ‘One Belt, One Road’ project.

Until China dramatically upped the tempo of this OBOR-related policy – at around the same time as the US signalled its lack of interest in continuing its own large-scale activities in the Middle East through its withdrawal from the Iran ‘nuclear deal’ and its withdrawal from much of Syria – India had stuck to a policy of trying to contain China. With the announcement in August 2020 of the US-brokered Israel-UAE ‘normalisation deal’ it appeared that a new corridor of co-operation was being developed from the US (and Israel), through the UAE (and Kuwait, Bahrain and in part Saudi Arabia) through to India. As much of China’s current turbo-driven expansion into the Middle East is predicated in the first instance on the energy sector, the starting point for the build-out of the US-Israel-UAE-India also appeared to be the energy sector. This made perfect sense as the oil industry in particular involves the movement of huge amounts of money, ships, equipment, technology and personnel in often disguised ways – confidential bank accounts, intelligence and military personnel who can pass as high-level oil technicians or security people, ships that can disappear through the flick of an AIS switch and so on – that other industries cannot match for activities that countries wish to conduct quietly. Putin also knows this – better than anyone – and these 28 deals with India are unlikely to be the end of his plans for India.

https://www.rt.com/business/543145-russia-triumph-india-us/

Russia is discussing the conversion of its rupees into another currency, 05.05.2023.

Sergey Lavrov: Russia is discussing the conversion of its Indian rupees into another currency.

Russia has accumulated "billions of rupees in Indian bank accounts" while the issue of converting them to another currency is being discussed, the foreign minister said. Reuters announced the suspension of negotiations on settlements in rupees

Russia is discussing the issue of converting its Indian rupees into another currency, Russian Foreign Minister Sergei Lavrov said , his words were published on the website of the Foreign Ministry.

The minister was asked about the suspension of negotiations on trade in Indian currency, which, in particular, was reported by Reuters, citing sources.

"This is problem. We have accumulated billions of rupees in Indian bank accounts. We need to use this money. But for now, these rupees have to be converted into another currency.

The issue is being discussed,” Lavrov said following the results of the Council of Foreign Ministers of the Shanghai Cooperation Organization (SCO Ministerial Council) in Panaji (Goa).

https://www.rbc.ru/economics/05/05/2023/645506779a79474d4cd2a418

India mulling wheat imports from Russia – Reuters, 08.17.2023.

New Delhi wants to lower domestic food prices, the outlet has said.

India is in talks with Russia on wheat imports at a discounted price as it seeks to tame inflation amid rising global prices, Reuters reported on Thursday, citing sources familiar with the matter. 

New Delhi is looking to boost supplies from Russia in a bid to drive down domestic wheat prices, which fueled inflation to a 15-month high in July, the outlet wrote. Indian wholesale wheat prices soared by around 10% over two months to a seven-month high in August on limited supplies. 

“The government is exploring the possibility of imports through private trade and government-to-government deals. The decision will be made cautiously,” Reuters said, citing one of the sources.

Although India only needs 3 to 4 million metric tons of wheat to cover the shortage, New Delhi might consider importing 8 to 9 million tons of wheat from Russia in order to intervene in the market more effectively and bring the prices down, another source told the outlet.  

“India can easily secure a discount of $25 to $40 per ton from Russia. This will ensure that the landed cost of wheat remains significantly below local prices,” a Mumbai-based dealer with a global trade house said. 

India has not imported wheat through diplomatic deals since 2017. It previously bought wheat from Ukraine, Russia, and Australia, but starting from 2018, the country sharply limited agricultural imports in order to support domestic producers.  

According to the Economic Times, the decision on a wheat deal with Russia could be made in the next few weeks. 

The Indian government is considering Russian wheat imports as one possible measure to cool down the prices of key commodities such as fuel and cereals to alleviate the impact of inflation on low-income households, the outlet said. 

Consumer inflation jumped to 7.44% in July, rising well above the Reserve Bank of India’s 6% target for the first time since February amid soaring food and vegetable prices.

https://www.rt.com/india/581396-india-russia-wheat-import/

India projected to become top buyer of Russian coal, 08.28.2023.

The South Asian country will overtake China by 2030, latest report is predicting.

India will become the top buyer of Russian coal in less than a decade, overtaking China, a report published on Monday by consulting firm Yakov and Partners (former McKinsey Russia) suggests.   

The South Asian country remains heavily dependent on coal as the largest source of power generation despite efforts to ramp up renewable-energy projects. By 2030 New Delhi is expected to become the leading importer of Russian thermal and coking coal, surpassing China, a market to which exports are predicted to decline, researchers say. 

After reaching a peak in 2030 India’s imports of Russian coal are expected to decrease, with South East Asia then becoming the major market for the fossil fuel, the report said.   

In 2022, the Chinese market was the top destination for Russian coal supplies, with 47 million tons (+5% year-on-year) of thermal coal and 21.1 million tons (+127% year-on-year) of coking coal imported. Supplies of coking coal for the country’s steel industry more than doubled last year compared to 2021.

A boost in Russian coal exports to China comes as Moscow diverts its trade flow following the EU’s import ban on the country’s coal. Beijing has substantially increased coal consumption as its industrial activity rebounds after three years of Covid restrictions.

Deliveries to the European Union and Japan either slumped or stopped completely amid Western sanctions against Russia, the report said.   

Meanwhile, India boosted imports of coal sharply and was ranked the second largest buyer of Russian coking coal, having purchased 9.3 million tons (+143% year-on-year).  

Türkiye and South Korea also remained among the top five importers of Russian coal, though researchers warn that Seoul will significantly cut its import shipments by the end of 2023.   

Exports of thermal and coking coal from Russia are not expected to face any major shocks in the baseline scenario, analysts say. Coal supplies from the country are expected to decrease only slightly and total 219 million tons by 2030 compared to 221 million tons in 2022, according to estimates from Russia’s Energy Ministry.

By the end of the decade India will account for 40% of Russian coal exports, Southeast Asian countries will import 20-25%, Türkiye and non-EU European countries together will account for about 20%, Africa and the Middle East, 15%, and China only 5%, according to the forecast.

https://www.rt.com/india/581990-india-russia-top-coal-importer/

Russia-India trade surpasses target set by Putin and Modi, 12.08.2023.

Economic and strategic engagement with New Delhi is immune from sanctions and global turbulence, Moscow’s ambassador has said.

The relationship between India and Russia has been flourishing despite a complicated geopolitical environment, underscoring the resilience of seven decades of diplomatic and economic cooperation, officials from both countries have stated at a business conference in New Delhi. 

Speaking on the occasion of the Russian Trade Representative Office in India celebrating its 70th anniversary, Moscow’s ambassador, Denis Alipov, noted that two countries’ partnership is immune from negative factors, such as sanctions and turbulent international environment.

“We have successfully overdone the $50 billion target set by our countries’ leaders for 2030. Trade turnover has increased to $48.8 billion in the first 9 months of this year, and it will grow further,” he stated, noting “unprecedented dynamism” in the economic exchange between the regions and provinces of both countries.

Deputy Head of the Russian Ministry of Industry and Trade Alexey Gruzdev, addressing the conference, hailed India’s economic and technological progress, noting that decades ago, Soviet-developed (and later Russian) technologies helped lay the foundations of India’s technological sovereignty.

Today, the two nations are increasingly dealing in agriculture, energy, banking, finance, customs, transport, logistics, education and humanitarian areas, he said. Gruzdev emphasized that Indian companies are successfully exploring the niches in the Russian market opened up after Western companies withdrew following sanctions pressure. 

The speakers also added that top officials from both countries would discuss plans to expand economic ties in all areas at the upcoming meeting of the Russian-Indian Intergovernmental Commission (IPC) on trade, economic, scientific, technical and cultural cooperation, which is set to take place in the coming weeks. The meeting is expected to be chaired by Russian Deputy Prime Minister and Trade Minister Denis Manturov, and Indian Foreign Minister Subramanyam Jaishankar.

Manturov and Jaishnakar last met in April 2023 in the Indian capital, where the countries agreed to expedite the implementation of a national currencies trade mechanism to solve the issues impacting bilateral trade in the wake of US-led sanctions imposed on Russian financial and other sectors. At the meeting, Jaishankar highlighted the “Make in India” initiative, aimed at turning the country into a major global hub. He emphasized the opportunities for joint projects with Russian companies under the initiative. 

Russia’s trade mission in New Delhi traces its history to December 1953, when the first Trade Agreement between the governments of the USSR and India was signed. The mission has been instrumental in leveraging the potential of the economic ties between the two countries and boosting bilateral trade.

According to mission officials quoted by TASS, the unprecedentedly high figures recorded this year for Russia’s export to India should be “harmonized” with the increasing imports from India to Russia in order to maintain a healthy trade balance and settle trade in national currencies more efficiently. “The trade mission is working closely with Indian export associations, trade councils and companies to stimulate Indian exports to Russia,” the mission said.

https://www.rt.com/india/588735-india-russia-trade-50-billion/

Russian petrochemicals giant to boost polymer exports to India,12.18.2023.

The plans are contingent on the launch of Sibur’s new Amur GCC production facility.

Russian petrochemicals major Sibur International is planning to significantly increase polymer exports to India, company CEO Andrey Frolov told the Economic Times in an interview published on Monday.


According to Frolov, the south Asian country could become a major destination for shipments from Sibur’s new polymer plant, the Amur Gas Chemical Complex (GCC), which is under construction in Russia’s Far East.


“India could become one of the target markets for Sibur after the plant is operational… Exporting polymers to India is currently challenging due to the long logistics route. Our existing plants are in the middle of Eurasia. However, when we launch the Amur GCC… we expect to significantly increase polymer exports to India,” Frolov stated. He added that the company is actively working on new transport routes to India, “taking advantage of the favorable geographic location of the Amur GCC in the east of the country.”


The Amur GCC is designed to produce 2.7 million tons of polymers (polyethylene and polypropylene) annually. Polymers are widely used in packaging, fiberglass, cable and wire insulation, epoxy glue, carpets, ropes, and plastic goods, including polyethylene cups, toys, buckets, and grocery bags.


According to company statements earlier this year, the plant’s construction is expected to be completed in 2026 and production is set to start in 2027. The facility is a joint project of Sibur and China’s Sinopec, which own 60% and 40% stakes respectively. The complex will become the main consumer of ethane and liquefied hydrocarbon gases from Gazprom’s Amur gas processing plant, which is also currently under construction.


Sibur has strong ties with India and has had a presence in the country for over a decade. The Russian company’s strategic partner in India is Reliance Industries, and it also has 25% stake in Reliance Sibur Elastomers Private Ltd, a joint venture producing butyl rubber, a product widely used in the tire and pharmaceutical industries.


https://www.rt.com/india/589251-russia-polymer-exports-india/

Trade between Russia and India exceeded $54 billion in 10 months of 2023., 12.19.2023.

MOSCOW (Sputnik) — Trade exchange between Russia and India exceeded 54,7 billion dollars in the ten months of 2023, said the Russian ambassador to New Delhi, Denis Alipov.

"According to the data of the Indian statistics, the mutual trade exchange has already reached 54,7 billion dollars in the first ten months of 2023. Russia has entered the four most important trading partners of India," Alipov said during the XIV Indo-Russian business dialogue, organized by the Rossiya Segodnya media group.

The ambassador added that Russia maintains its leading position in hydrocarbon supply, providing more than a third of India's imports of mineral fertilizers, as well as agricultural products and diamonds.

In addition, Alipov stressed that contacts between regions show "a positive dynamic"; compared to 2022, the number of visits by delegations from Russian regions increased by 1.5 times.

According to the diplomat, among the Russian cities from which the delegations come, Moscow traditionally occupies the first place, while the city of St. Petersburg, Astrakhan, Nizhny Novgorod, Ryazan, as well as the Altai, Perm, Primorye and other regions "actively follow the Russian capital."

The ambassador also highlighted that in 2023 the number of business missions and industry events between the two countries increased.

Yandex Translate from Spanish

https://sputniknews.lat/20231219/el-comercio-entre-rusia-y-la-india-supero-los-54000-millones-en-10-meses-de-2023-1146708549.html

Surge predicted in Russia-India trade, 12.21.2023.

Volumes are projected to reach $100 billion by 2030.

Trade between India and Russia is expected to reach $100 billion by the end of the decade, Kommersant reported on Thursday, citing analysts from the Russian-Asian Business Council (RABC).

Russian exports to India are forecast to grow from $32.5 billion in 2022 to as much as $95 billion in 2030, while imports are predicted to surge from $2.5 billion to more than $20 billion over the same period.

Trade between the two countries was much less significant before 2022, although Western sanctions imposed on Russia over the Ukraine conflict have forced Moscow to redirect exports to Asia.

Russian export growth will largely be driven by energy resources, while the rise in imports from India will come from increased purchases of pharmaceutical and chemical products, according to experts. 

India has become one of the largest buyers of Russian oil and coal since February 2022. RABC analysts expect demand for these commodities in the South Asian nation to increase further in years to come.

Russia is also expected to boost sales of fertilizers, machinery and equipment, wood produce, and base metals to India.

Meanwhile, Indian exports to Russia are forecast to see a major increase, as pharmaceutical companies as well as suppliers of chemical products and seafood expand their presence in the Russian market.

Analysts stressed that the current trade imbalance in favor of Russia is partially due to the withdrawal of some Indian corporate majors from the Russian market under the threat of US secondary sanctions.

The refusal of some parties to use the Indian rupee in trade settlements has also contributed to the imbalance, the RABC said.

Russian banks have opened so-called vostro accounts in India in order to carry out commercial settlements in national currencies. The facility allows parties to conduct transactions in rupees and convert them into rubles.

However, the flow of rubles to authorized Indian lenders can only be ensured by local exporters, whose funds are often insufficient.

Experts noted that Russian investments in India are currently stagnant “against the backdrop of an increase in the volume of rupees in the accounts of leading Russian financial and energy companies.”

https://www.rt.com/india/589445-india-russia-trade-surge-outlook/

India-Russia ties are on a ‘positive trajectory’ – foreign minister, 12.26.2023.

S. Jaishankar had a “forward-looking interaction” with Moscow’s strategic community on the first day of his visit to the country.

Subrahmanyam Jaishankar, India’s external affairs minister, held talks with the Russian strategic community, including top foreign policy experts and researchers, during the first days of his official visit to Russia on a four-day trip that began on Monday.

The diplomat is in Russia as a part of the ongoing high-level exchanges between the two countries, according to the Indian Foreign Ministry’s statement. 

Taking to X (formerly Twitter) on Monday, Jaishankar said he had “an open and forward-looking interaction” with members of the Russian strategic community, where he spoke of “the importance of rebalancing and the emergence of multipolarity.”

“Exchanged views on how India-Russia ties will develop in that framework. Also discussed connectivity, multilateralism, big power competition and regional conflicts,“ the diplomat noted. “Geopolitics and strategic convergence will always keep India-Russia ties on a positive trajectory.”

Jaishankar also shared a photo of himself with the Kremlin in the background, along with an image of a Soviet-era pass to Red Square, dated August 18, 1962, with his surname on it. The date marked a ceremony to honor the cosmonauts of ‘Sputnik-3’ and ‘Sputnik-4,’ Andriyan Nikolaev and Pavel Popovich.

Jaishankar is believed to have visited Moscow in 1962 as a seven-year-old boy, along with his father, renowned strategic analyst K. Subrahmanyam, who served in the Ministry of Defense at the time, The Hindu newspaper noted. The now-foreign minister served as third secretary and second secretary in the Indian mission to the USSR from 1979 to 1981 and learned Russian during his two-year stay in Moscow. 

On Wednesday, the Indian foreign minister will meet his counterpart, Sergey Lavrov, to discuss bilateral, multilateral, and international issues. He will also discuss the economic engagement between the two nations with Deputy Prime Minister and Minister of Industry and Trade Denis Manturov. The official talks will be followed by a meeting with the Indian diaspora and visits to cultural and educational institutions in Moscow and St. Petersburg to promote strong people-to-people and cultural ties. 

Jaishankar’s visit to Moscow comes at a time when economic engagement between the two countries has reached record heights against the backdrop of Western sanctions against Russia. Bilateral trade has doubled this year, reaching $50 billion in the first nine months of 2023, according to official data. This is mainly due to New Delhi’s increased imports of Russian oil, coal, and other strategic goods, including defense procurements. 

Issues such as diversifying trade flows and settling transactions in national currencies remain high on the bilateral agenda. Moscow has amassed a surplus of over $40 billion in special vostro accounts held in Indian banks in the domestic currency due to payment settlement issues after Russia was cut off from the most commonly used international payment system, SWIFT.  Moscow has, on various occasions, called for “extra efforts” from the Indian side, predominantly financial institutions, to adopt the rupee-ruble payment mechanism at a bigger scale, given rising trade volumes.

While in Moscow, Jaishankar and Russian top officials are also expected to discuss strengthening maritime connectivity between the two countries. This includes speeding up work on operationalizing two trade corridors, the  7,200 km-long International North-South Transport Corridor (INSTC) that connects the two countries via the Caspian Sea and Iran, and the Vladivostok-Chennai route that can be used to transport coal, oil, liquefied natural gas, fertilizers, containers and other types of cargo.

https://www.rt.com/india/589691-india-russia-ties-jaishankar-in-moscow/