How the war fueled trade between India and Russia

A year after the start of the Ukraine war, trade in goods between Russia and India has reached new highs. Relations between New Delhi and Moscow have withstood Western pressure, and bilateral trade has been both the greatest benefactor and catalyst of this transformation. However, a sharp rise in imports from sanctions-hit Moscow has left the trade figures overwhelmingly lopsided. Historically, India’s imports from Russia have remained under five times its exports to the country, with the ratio hitting 4.1 in 2017-18, previously the highest under the Narendra Modi government. But in 2022-23 through January, imports were 15 times higher than exports.

India’s imports from Russia have seen a substantial surge in April-February of this fiscal year, reaching a staggering US$41.56 billion, according to the latest data from the Department of Commerce. This figure is almost five times higher than last year’s imports.

The main reason for this exponential increase is the increasing volume of crude oil shipments from Russia to India. Russia was India’s 18th largest import partner in 2021-22 with imports worth US$9.86 billion. From just 0.2 percent of all oil imported by India, Russia provided 28 percent of all oil imported in January.

Before the Russia-Ukraine conflict, Russia had a market share of less than 1 percent in India’s import basket. In January, however, Russia’s share of India’s oil imports rose to 1.27 million barrels a day, accounting for a 28 percent share, energy cargo tracker Vortexa reported.

India, the world’s third-biggest importer of crude oil, is taking advantage of the discounts on Russian oil that became available when some Western countries decided to boycott it to punish Moscow for its invasion of Ukraine.

According to the ministry, imports from China and the United Arab Emirates increased in the April-February period. Imports from China rose about 6.2 percent to $90.72 billion, while imports from the United Arab Emirates saw a more significant increase of 21.5 percent to $48.88 billion.

In addition, India saw a significant increase in imports from the US during the period, with a growth rate of around 19.5 percent, totaling US$46 billion.

On the export front, the US emerged as the top destination for Indian exporters during the 11-month period, accounting for 17.5 percent of the country’s total outbound shipments.

Exports to the US rose to $70.99 billion from $68.447 billion in April-February 2021-22.

In addition, it was observed that exports from India to UAE increased to US$28.63 billion in April-February compared to US$24.95 billion in the corresponding period last year. Conversely, exports to China fell to US$13.64 billion over the same period, compared to US$19.81 billion reported in April-February 2021-22.

Strengthening trade and economic cooperation between India and Russia is a top priority for both countries’ political leaders, according to revised targets to increase bilateral investment to US$50 billion and bilateral trade to US$30 billion by 2025 increase.