Amid an increased import of Russian oil and almost a four-fold economic growth between the two countries, talks are expected to focus on the rupee-rouble payment mechanisms, delays in defence equipment supply, and the India-Eurasia Economic Union (EEU) free trade agreement.
During April 2020 to March 2021, India and Russia witnessed bilateral trade totalling $8.1 Billion, notes the Indian Embassy in Russia. Indian exports reached $2.6 billion, while imports from Russia stood at $5.48 Billion.
Russian data, however, reports a trade volume of $9.31 Billion, with Indian exports at $3.48 Billion and imports at $5.83 Billion, as per India’s embassy in Russia, news agency ANI reported.
S Jaishankar to speak about robust India-Russia defence deal
India and Russia share a robust defense collaboration, progressing from a buyer-seller relationship to joint research and development. India heavily relies on Russia for about 60-70% of its defence supplies but aims to diversify sources. Amid the Russia-Ukraine conflict, India secured discounted Russian oil, in an attempt to nurse domestic inflationary pressures.
Moreover, While not explicitly denouncing the invasion, India condemned the Bucha massacre and expressed concern over Russian nuclear remarks and despite Western pressure, India advocated for diplomatic resolutions.
S Jaishankar to discuss the ₨-Ruble Issue
Owing to Western sanctions imposed on Russia, New Delhi and Moscow established a rupee-ruble mechanism for trade that has since become a ‘problem’ for Moscow.
In November 2023, the Government of India is trying to find means by which Russia can use its surplus rupees, including potential business deals, infrastructure investments, investments in government securities and a potential system wherein Indian exporters could be paid directly in rupees.
The result of the trade deficit between Russia and India led to Indian importers using dirhams and the renminbi yuan to pay for Russian oil, despite its own resistance to trade in yuan. Given the high volumes of trade between Russia and China, Moscow has more avenues to use the yuan than the Indian rupee.
The Chennai-Vladivostok Corridor is also on S Jaishankar’s list
Apart from discussions on the rupee-ruble mechanism and economic ties, connectivity projects including the Chennai-Vladivostok maritime corridor are also expected to figure in talks during Jaishankar’s visit.
In September, during the eighth Eastern Economic Forum meeting held in Vladivostok, the two countries had discussed the development of the Eastern Maritime Corridor connecting the Russian port of Vladivostok in the Pacific Ocean, with the port of Chennai on India’s Coromandel coast.
The development of the Eastern Maritime Corridor would reduce the time of travel of cargo between the Russian Far East and India to about 24 days from the current time of over 40 days it currently takes to transport goods via the port of St. Petersburg to Mumbai, according to reports.
The Chennai-Vladivostok sea route would cover a distance of about 5,600 nautical miles, while the current St. Petersburg-Mumbai route covers a distance of about 8,675 nautical miles.
Way Forward for both countries
India has been a reliant partner to Russia even in times where USA and European nations were sanctioning the country for their invasion in Ukraine.
Even after strict sanctions India never stopped importing oil and other products. The corroboration of the two has been beneficial for both of the countries. The friendship amongst the leaders and the countries have become formidable ever since the Russia-Ukraine conflict.
However, there are certain issues which have been blindsided that need to be addressed. This visit could be of behemoth significance especially for India if EAM S Jaishankar manages to tick off every agenda from his list.