Strategic independence

Russia visit ticked the right boxes

Prime Minister Narendra Modi’s decision to choose Moscow for his first bilateral visit in his third term did not go unnoticed in the diplomatic world. The move evoked reactions from the United States, which is hosting the North Atlantic Treaty Organization allies to mark the alliance’s 75th anniversary, and from Ukraine, which is fighting Russia to protect its sovereignty and territorial integrity. However, from an Indian point of view, the visit was a signal of continuity in the government and the relevance of its relations with Russia, which goes back to the Cold War era and has stood the test of time. The visit ticked all the right boxes from the Indian diplomatic standpoint, making it clear on Russian soil that India stands for peace and is willing to help achieve it in the region. As Mr Modi said, solutions cannot be found on the battlefield. Only dialogue and diplomacy is the way forward.

On the bilateral front, the visit yielded significant agreements. India is the largest importer of defence equipment and Russia is its biggest supplier, though the dependence has decreased over the years. There have been genuine concerns in India about Russia’s ability to supply the necessary parts and components for important weapons systems because of its military engagement in Ukraine since February 2022. In this regard, both countries have agreed to joint manufacturing in India of spare parts and components for Russian-origin arms and weapons systems by setting up joint ventures and transfer of technology. While the need for further diversification in defence imports and increasing domestic production cannot be overemphasised, the joint ventures should help India in the medium to long term.

Trade between the two countries has increased significantly since the beginning of the Ukraine war but the balance is steeply in favour of Russia because of India’s increased crude oil imports. Bilateral trade stood at $65.6 billion in 2023-24, compared to just about $10 billion in the pre-pandemic period. However, India’s trade deficit with Russia was worth $57 billion. While both nations now aim to increase the trade to $100 billion by 2030, which should not be difficult, there is also an agreement on increasing exports from India to contain the imbalance. Since part of the trade is in local currency — and both countries aim for settlements in national currencies — the Russians can also be encouraged to increase investment in India’s financial assets. Indian markets and currency have shown significant stability in recent years and can help Russia diversify its foreign asset holdings, given the West is no longer an option. Russia could also increase real investment in India. There were agreements in transport and connectivity. Both sides have agreed to increasing infrastructure capacity, including the implementation of the International North-South Transport Corridor and the Chennai-Vladivostok Eastern Maritime Corridor.

Overall, the visit was a reflection of Indian strategic autonomy and its historic engagement with Russia. India, for instance, has substantially increased oil purchases from Russia after the West imposed sanctions for invading Ukraine, which has helped keep prices contained. Indian refineries — capable of handling Russian Urals oil — selling refined products in international markets also arguably helped stabilise international prices. Moreover, in the changed geopolitical conditions, which have brought Russia and China closer, India will need to do everything possible to protect its interests.