India and Russia
The relationship between India and Russia has a long and historically significant trajectory, marked by diplomatic, economic, and strategic ties. Here is an overview of the historical context and key milestones in the relationship between India and Russia:
Pre-Independence Era:
- During the pre-independence period, the Soviet Union, of which Russia was a part, maintained diplomatic relations with the British Raj. The relationship was relatively limited during this time.
Post-Independence Era:
- After India gained independence in 1947, diplomatic relations between India and the Soviet Union were established in 1947 itself.
- The relationship gained momentum with the signing of the Treaty of Friendship in 1971, a few months before the Indo-Pakistani War that led to the creation of Bangladesh.
Key Milestones:
Strategic Partnership: The Indo-Soviet Treaty of Friendship and Cooperation signed in 1971 laid the foundation for a strong and enduring relationship between the two countries. The treaty emphasized political, economic, and military cooperation.
Defense Cooperation: The Soviet Union became a major supplier of military equipment to India, and defense cooperation between the two countries has been a cornerstone of their relationship. This cooperation continues with Russia being a key supplier of defense equipment to India.
Economic Ties: Economic cooperation has been an integral part of the relationship, with the two countries engaging in trade and economic activities. However, the economic ties have faced challenges and have been a subject of discussion in recent years.
Nuclear Cooperation: Russia played a crucial role in the establishment and development of India’s nuclear program. The construction of the Kudankulam Nuclear Power Plant is a notable example of nuclear cooperation between the two countries.
Space Cooperation: India and Russia have a long history of collaboration in space exploration. The Russian space agency, Roscosmos, has been a key partner for the Indian Space Research Organisation (ISRO).
Multilateral Engagements: Both countries have collaborated on various international platforms, including the United Nations, BRICS (Brazil, Russia, India, China, South Africa), and the Shanghai Cooperation Organization (SCO).
Cultural and People-to-People Ties: Cultural exchanges, educational programs, and people-to-people contacts have been actively encouraged, fostering a deeper understanding between the two societies.
Contemporary Relationship:
The collapse of the Soviet Union in 1991 had implications for the Indo-Soviet relationship. However, India and Russia have worked to maintain and strengthen their ties in the post-Soviet era.
Despite changes in the global geopolitical landscape, both countries continue to refer to their relationship as a “Special and Privileged Strategic Partnership.”
The relationship has evolved, with new agreements and collaborations being pursued in areas such as technology, energy, and economic cooperation
India-Russia Trade Relations
- The two countries intend to increase bilateral investment to US$50 billion and bilateral trade to US$30 billion by 2025.
- Bilateral trade during FY 2020 amounted to USD 8.1 billion.
- From 2013 to 2016 there was a major decline in the trade percentage between the two countries. However, it increased from 2017 onwards and a constant increase was noticed in 2018 and 2019 as well.
Increasing Dependency on Russian Oil Imports
- India’s oil imports have shifted significantly towards Russia, surpassing traditional suppliers such as Saudi Arabia and Iraq.
- Russia’s geopolitical situation, including Western sanctions following the military operation in Ukraine, has prompted Moscow to offer steep discounts on its crude oil, finding a ready market in India.
- India, unlike Western countries, has chosen not to impose formal sanctions on Russia, leading to a nearly 13-fold increase in crude oil imports from Russia in 2022-23, reaching over $31 billion.
Payment Challenges and Geopolitical Ramifications
- India faces difficulties in paying for Russian oil due to breaching the $60 per barrel price cap set by the US and European nations, as Russia offers lower discounts on its crude.
- Using currencies like the Chinese yuan for payments raises geopolitical concerns due to strained ties with Beijing.
- Western sanctions have limited Russia’s access to the global secure interbank system (SWIFT), making it challenging for Indian exporters to receive payments for goods already shipped to Russia.
The Rupee-Rouble Mechanism and Trade Deficit Concerns
- Negotiations between India and Russia to reactivate the rupee-rouble trade arrangement, an alternative payment mechanism, have faced obstacles.
- Concerns over the rouble’s convertibility and volatility, along with India’s ballooning trade deficit, have hindered the implementation of the rupee-rouble payment mechanism.
- India’s trade deficit with Russia reached $43 billion in 2022-23, leading to significant amounts of Indian rupees in Russian banks that cannot be utilized for Russia’s war efforts.
De-Dollarisation Efforts and Alternative Payment Methods
- The US sanctions have prompted countries to explore de-dollarisation, replacing the US dollar as the global reserve currency.
- India has released a roadmap for the internationalization of the Indian rupee to enhance its acceptance globally.
- Indian refiners have settled non-dollar payments for Russian oil using currencies like the Chinese yuan and the UAE dirham.
Future Considerations and Potential Solutions
- Using the Chinese yuan for payments raises geopolitical concerns, given the strained India-China relations.
- Possible solutions to counter the trade deficit with Russia include seeking investments in Indian energy projects or government bonds from Russia.
- India’s efforts to internationalize the Indian rupee may contribute to broader acceptance, but the value and acceptability of any currency depend on its purchasing power
India has indeed been strengthening its defense ties with the United States and Israel. The geopolitical landscape can change, so it’s advisable to check for the latest developments for the most current information.
India-USA Defense Relations: India and the United States have been gradually enhancing their defense cooperation over the years. The two countries have engaged in various defense agreements and have conducted joint military exercises. The defense ties include the sale of advanced military equipment, technology transfer, and strategic dialogues. The signing of the Logistics Exchange Memorandum of Agreement (LEMOA) in 2016 and the COMCASA (Communications Compatibility and Security Agreement) in 2018 marked significant milestones in the defense partnership.
India’s procurement of military hardware from the United States has increased, with deals for items such as Apache and Chinook helicopters, P-8 Poseidon maritime patrol aircraft, and various other defense systems.
India-Israel Defense Relations: India and Israel have maintained robust defense ties for several years. Defense cooperation between the two nations encompasses areas such as counter-terrorism, intelligence sharing, and defense technology. Israel has been a significant supplier of military equipment to India, including unmanned aerial vehicles (UAVs), missile defense systems, and small arms.
The defense collaboration between India and Israel extends beyond arms sales to joint research and development projects. Both countries benefit from sharing expertise in areas like cybersecurity and counter-terrorism
The history of Russian arms deals with Pakistan is complex and reflects shifting geopolitical dynamics. Here’s a breakdown of the key points:
Historically Limited Relationship:
- Cold War Era: During the Cold War, Pakistan was firmly aligned with the United States, while the Soviet Union maintained a strategic partnership with India. This resulted in limited arms sales to Pakistan from the USSR.
- Exceptions: There were occasional exceptions, such as in the 1960s, when Pakistan acquired a small number of Mi-8 helicopters from the Soviet Union.
Recent Warming of Ties:
- Changing Geopolitics: The collapse of the Soviet Union, the rise of China, and the US pivot towards Asia have altered the geopolitical landscape, leading to a recent thawing of relations between Russia and Pakistan.
- Arms Sales: Since the 2010s, Russia has gradually become more open to selling arms to Pakistan, including:
- Mi-35M attack helicopters
- Discussions on potential sales of air defense systems and anti-tank weapons
- Economic Motivation: Russia’s interest in diversifying its arms exports market and Pakistan’s desire to reduce reliance on traditional suppliers have played a role.
Factors Affecting the Relationship:
- India Factor: Russia seeks to balance its deepening arms trade with Pakistan against its long-standing strategic partnership with India. This balancing act can at times limit the scope of Russia-Pakistan arms deals.
- US Factor: The US-Pakistan relationship, though strained at times, continues to influence Pakistan’s defense choices. Pakistan needs to be mindful of any potential repercussions of acquiring Russian arms.
- Afghanistan: With the withdrawal of US forces from Afghanistan, the geopolitical situation in the region has become more fluid, potentially impacting the dynamics of Russia-Pakistan arms deals
Geopolitical Realignments:
- India’s Multi-Alignment Approach: India, pursuing a non-aligned foreign policy and greater strategic autonomy, has significantly deepened ties with the United States and the West in recent years. This includes participation in forums like the Quad, seen by Russia as an “Asian NATO” aimed at containing China.
- Russia’s China Tilt: Russia, facing Western sanctions and seeking to counterbalance US influence, has significantly strengthened its strategic partnership with China. This growing closeness is a cause for concern for India.
Economic Imbalance:
- Limited Trade: Despite historical ties, bilateral trade between India and Russia remains relatively low compared to India’s trade with partners like the US and China.
- Stagnant Investments: The two countries have not realized their full potential in terms of reciprocal investments. Attempts to boost economic cooperation have had limited success.
- Energy Uncertainties: While India has increased oil imports from Russia in the wake of the Ukraine conflict, this is a short-term opportunistic move. Potential price caps and long-term energy transition create uncertainty.
Diverging interests:
- Afghanistan: The Taliban takeover in Afghanistan and the regional security implications have led to slightly divergent approaches between India and Russia on how to engage with the regime and address the situation.
- Indo-Pacific: While both Russia and India desire a multipolar world order, their visions for the Indo-Pacific region differ. India views the Indo-Pacific through the lens of the Quad and a free and open regional order, which Russia views with suspicion.
- Defense Diversification: India’s efforts to diversify its sources of military hardware, with an increased focus on indigenous production under the “Make in India” initiative, also partially reduce its reliance on Russia
The Eurasian Economic Union (EAEU) is a significant regional integration project led by Russia. Here’s a breakdown of its origins, structure, goals, and potential implications:
Origins
- Post-Soviet Integration: The EAEU emerged from the desire to create a closer economic bloc among former Soviet republics to enhance regional trade and cooperation.
- Custom Union Precursor: The EAEU built upon the foundation of the Eurasian Customs Union established by Belarus, Kazakhstan, and Russia in 2010.
- Founding Treaty: The treaty establishing the Eurasian Economic Union was signed in 2014, with Armenia and Kyrgyzstan joining as additional members.
Key Features
- Economic Integration: The EAEU aims to create a single market with:
- Free movement of goods, services, capital, and labor across member states.
- Common policies on trade, energy, competition, transportation and other economic areas.
- Institutional Structure: The EAEU has a decision-making structure that includes:
- Supreme Eurasian Economic Council (heads of state)
- Eurasian Intergovernmental Council (heads of government)
- Eurasian Economic Commission (supranational regulatory body)
- Geopolitical Dimension: Russia envisions the EAEU as a potential Eurasian counterpart to the European Union, serving as a way to project influence in the post-Soviet space and create a bridge between Europe and Asia
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