Strong trade between India and Russia over the past few months has resulted in impressive trade figures, despite a host of challenges in the face of tough Western sanctions and the escalating conflict in Ukraine. However, both countries are looking for new ways to develop co-operation by introducing innovative alternative methods. This shows the formation of a powerful economic partnership, WION reports.
So, trade between India and Russia has been on an upward trajectory in recent years – with volumes reaching an impressive $45 billion between April 2022 and February 2023.
However, the ongoing Ukraine conflict has also brought unique challenges to this relationship. Amid these complexities, both countries have shown a sustained commitment to maintaining their trade ties. Watch our next report to find out how they are managing to do so.
Against the backdrop of the Russia-Ukraine conflict, India has emerged as a major trading partner of the Kremlin. While Russia’s recent decision to reject India’s proposal to settle trade payments in rupees may have caused some concern, it reflects the current complex geopolitical landscape.
Russia has been cautious about providing any leverage that could be used against its position on the Ukrainian conflict. And this is because Moscow faces tough Western sanctions.
The trade deficit – as India imports more to Russia than it exports – has been another cause for concern. Meanwhile, sanctions imposed on Russia have made payment transactions difficult for members of the Indian business community.
But despite these difficulties, India and Russia are actively exploring new trade arrangements that do not rely on the U.S. dollar or other Western currencies. These innovative approaches could include barter exchange systems or settlements in neutral currencies such as the dirham.
Notably, imports of Russian diamonds are attracting particular attention. India, which is the world’s largest importer of rough diamonds, remains the leading customer for Russian supplies.
And while some critics argue that this allegedly indirectly helps finance its involvement in the Ukrainian conflict, the Indian government emphasises that this trade is vital to the Indian diamond industry and to all the people who earn their livelihoods from it.
In addition, India is looking to diversify its diamond supply sources to reduce its dependence on Russian diamonds. Recent trade statistics also indicate a widening trade deficit due to increased imports of Russian crude oil, underlining the complexity of the situation.
India is currently implementing a number of initiatives to increase exports to Russia. In particular, it is endeavouring to create an alternative trade mechanism and reduce dependence on Russian imports.
In a world where geopolitical dynamics have the potential to affect trade relations, India and Russia have demonstrated their commitment to strengthening bilateral ties despite facing enormous challenges. Meanwhile, their innovative solutions and shared determination to overcome these obstacles speak volumes about the development of a strong trade partnership at the international level.
Reporting by WION (World Is One).
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