Russia is trying to offset the damage from Western sanctions through trade ties in Asia. The calculation could work: Since the beginning of the war, India has been importing much more Russian oil.
The Russian Foreign Minister Sergey Lavrov was visibly satisfied after his visit to India. “We are friends,” he said during a performance with his colleague Subrahmanyam Jaishankar in New Delhi. Then he added: “We are ready to supply any goods that India wishes to buy.”
After his visit to China Lavrov visited India this week, a country that is already one of the largest buyers of Russian raw materials. In view of the EU’s announcement to move away from coal, oil and gas supplies as soon as possible Russia to say goodbye, Moscow is currently looking specifically for alternatives in Asia. In addition to India, the G20 country Indonesia had already signaled an interest in buying Russian oil.
India could benefit from the Ukraine war
India – after China the most populous country on earth – is of particular importance for Russia. The world’s largest democracy has faced western sanctions over the Russian invasion of the Ukraine not connected, but drives a largely neutral course.
While New Delhi has called for an immediate ceasefire in Ukraine, it has declined to explicitly condemn Moscow’s actions. She has abstained from voting on several UN resolutions on war. US President Joe Biden had therefore criticized the Indian course as “shaky”. Because at the same time the country belongs to a so-called “quad” group with the USA, Japan and Australia because of the fears of China. But as much as they like working together with the USA against China, the Indian government is not interested in the conflict in distant Europe.
Sergej Lavrov (l) and Subrahmanyam Jaishankar (r) in New Delhi, India: Russia is luring the Indian government with discounts on imports of goods such as oil and coking coal. (Source: @DrSJaishankar/Twitter/Handout/Reuters)
Now, much to the chagrin of Europeans and Americans, there are indications that India could become one of the beneficiaries of the Western conflict with Russia, thereby supporting the government in Moscow. So far, Russia is India’s main supplier of defense supplies, but the combined annual trade between the two countries is still small. It has averaged only about $9 billion over the past few years, mostly fertilizer and some oil. For comparison, India’s bilateral trade with China is more than $100 billion a year.
But given the sharp discount on Russian crude since the attack on Ukraine, India has now bought at least 13 million barrels, compared with almost 16 million barrels imported from Russia for all of last year.
Moscow attracts with discounts
The government in New Delhi rejects criticism from the West. “I would put my country’s national interests first and I would put my energy security first,” Finance Minister Nirmala Sitharaman told CNBC-TV18, referring to cheap Russian oil. “Why shouldn’t I buy it? I need it for my people.”
India is also considering doubling its imports of Russian coking coal for steelmaking, India’s steel minister said on Sunday. India also recently struck a deal to buy 45,000 tons of Russian sunflower oil for April – to replace failed supplies from Ukraine.
“India will import more items from Russia overall, especially if there is a discount,” said a senior Indian government official. The country could provide Russia with much-needed foreign exchange and serves Russia’s president Wladimir Putin as an example of why he thinks he can withstand Western sanctions.
India and Russia are planning their own payment system
India is also circumventing financial sanctions against Russia, which include excluding a number of Russian banks from the Swift settlement system. The New Delhi government is now trying to set up a rupee-ruble trading system. This could progress the decoupling of the world’s most populous countries from transactions in euros and dollars.
Lavrov agrees: “It is quite clear that more and more transactions are being processed through this system in national currencies, bypassing the dollar, euro and other currencies,” he said. Both countries could use a rupee-ruble mechanism to trade in oil, military equipment and other goods.