India-Russia Trade Relations

In News

• With the sharp spike in trade, Russia has now become India’s seventh biggest trading partner — up from its 25th position last year.
  • The US, China, UAE, Saudi Arabia, Iraq and Indonesia were the six countries that recorded higher volumes of trade with India during this period.

More about the news

• India’s bilateral trade with Russia has soared to an all-time high of $18,229.03 million in just five months (April-August) of this financial year (2022-23).
  • Imports:
    • The record level of bilateral trade between India and Russia is mainly due to a sudden jump in imports from Moscow.
    • Petroleum oil and other fuel items (mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes) accounted for 84% of India’s total imports from Russia.
      • Fertilisers were second.
  • Exports:
    • On the other hand, pharmaceutical products and organic chemicals were the two main items shipped to Moscow.
    • 

• Significance:
  • Trade:
    • India’s decision on purchasing oil from Russia will continue to be guided by its energy security requirements.
    • Heavy discounts offered on Russian crude and fertilizers compelled India to maintain trade.
  • Global discomfort:
    • When the war with Ukraine broke out in February, many countries, including India, scrambled to find trade alternatives for commodities Russia exported.
    • India has also decided to purchase discounted crude oil from Russia, triggering concern among a number of Western powers.

India-Russia Relations

• India and Russia have a history of strong strategic, military, economic, and diplomatic relationships.
• Political Relations:
  • The Annual Summit meeting between the Prime Minister of India and the President of the Russian Federation is the highest institutionalized dialogue mechanism in the strategic partnership between India and Russia. 
  • So far 20 Annual Summit meetings have taken place alternatively in India and Russia. 
• Intergovernmental Commissions: 
  • There is regular high-level interaction between the two countries.
  • The IRIGC (India-Russia Intergovernmental Commission): 
    • It is the main body that conducts affairs at the governmental level between both countries. Both countries are members of international bodies including the UN, BRICS, G20 and SCO.
  • Two Inter-Governmental Commissions: 
    • One on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC), co-chaired by EAM and the Russian DPM, and 
    • Another on Military-Technical Cooperation (IRIGC- MTC) co-chaired by Russian and Indian Defence Ministers, meet annually.
• Trade and Economic Relations: 
  • Both sides revised targets of increasing bilateral investment to US $50 billion and bilateral trade to US $30 billion by 2025. 
    • India’s merchandise imports from Russia include petroleum oil and other fuel items, fertilizers, coffee and tea, spices, nuclear reactors, and animal and vegetable fats, among others.
• Bilateral investment: 
  • Russian investment in India in 2017 has reached 18bn USD and India’s total investment in Russia so far is 13 bn USD. 
  • The investment target of 30 bn USD by 2025 has been achieved.
• Nuclear Energy: 
  • Russia recognizes India as a country with advanced nuclear technology with an impeccable non-proliferation record. 
  • Kudankulam Nuclear Power Plant (KKNPP) is being built in India with Russian cooperation. 
• Space Cooperation: 
  • Both sides cooperate in the peaceful uses of outer space, including satellite launches, GLONASS navigation system, remote sensing and other societal applications of outer space.
• Science & Technology: 
  • The Working Group on Science and Technology functioning under IRIGC-TEC, the Integrated Long Term Programme (ILTP) and the Basic Science Cooperation Programme are the three main institutional mechanisms for bilateral Science and Technology cooperation.
• Cultural Cooperation: 
  • There is a strong tradition of Indian studies in Russia. 
  • JNCC maintains close cooperation with leading Russian institutions. 
  • There is strong interest among Russian people in Indian dance, music, yoga and Ayurveda.
• Defence and Security Cooperation:
  • India has longstanding and wide-ranging cooperation with Russia in the field of defence. 
  • BrahMos Missile System as well as the licensed production in India of SU-30 aircraft and T-90 tanks are examples of such flagship cooperation.
  • Both sides concluded agreements on the supply of S-400 air defence systems, construction of frigates under Project 1135.6 and shareholders agreement on the formation of a joint venture to manufacture Ka-226T helicopters in India.
  • The two countries also hold exchanges and training exercises between their armed forces annually termed INDRA.