India and Russia: The 2023 Trade and Investment Dynamics

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By Emil Avdaliani with additional comments by Chris Devonshire-Ellis

Russia and India are not exactly currently aligned in current trade, however their visions often converge when it comes to the geopolitical aspects concerning the present world order. Both, to a varying extent, loath the West’s preponderance and use of economic sanctions for political purposes. Yet the two also are deeply self-interested powers which try to avoid geopolitical fixations and tend to build their foreign policies around their national interests.

Pragmatism drives both their respective national behaviors, and it largely explains why India has taken a more careful position when it comes to Western calls to isolate Russia economically and diplomatically in the wake of the conflict in Ukraine.

Both also need each other. Russia has huge reserves of energy resources such as oil and gas, while India is one of the largest energy consumers in the world. The development of cooperation in the energy sector, including oil and gas supplies, as well as joint projects in the field of renewable energy sources, is mutually beneficial. India is actively developing its roads, railways, ports and airports infrastructure. India is also actively seeking Russian partners that can offer necessary technologies, equipment and experience to help India to realize its infrastructure projects – especially true as India is not part of China’s Belt & Road Initiative and is missing out on the global infrastructure development reach and collaborative participation with its SOEs. That is less to do with pragmatism and rather more with long-standing border disputes. Delhi then must make do with Moscow rather than Beijing as an infrastructure investment partner. Both of course are members of BRICS, which as a group does encourage multilateral trade and trade cooperation between them.

In terms of trade and development sectors, pharmaceuticals and medicine are where the development and production of drugs can be promising for both countries. Moscow and New Delhi can also extensively cooperate in information technology and communications sphere.

Big Energy & Big Pharma

Major Indian oil and gas players such as ONGC Videsh Ltd, Bharat Petroresources Ltd., Indian Oil Corporation, and Oil India have invested a total of approximately US$16 billion in the Russian projects such as Sakhalin-1, the Vankor oil and gas field, Taas-Yuryakh Neftegazodobycha and Imperial Energy. ONGC Videsh Ltd. owns a 20% stake in the Sakhalin-1 project. Indian state-owned companies are also interested in buying shares in Western energy players, including ExxonMobil, Shell, BP, which have exited Russia following the Western sanctions imposed on Moscow. A home in Indian hands seems increasingly likely and will help secure India’s future energy needs.

Other major Indian investments in Russia are in the pharmaceutical sectors, where some US$35 million worth of investment capital has found its way into the Dubna SEZ near Moscow. The implementation of the project was announced back in 2014, by 2018, the construction was completed. Indian market share in the Russian pharma market is increasing and now accounts for 2.4% of all Indian drug exports.

This is also expected to significantly increase due again to Western sanctions (although most medicinal drugs are not subject to these) and a resulting Russian consumer preference to actively seek out non-Western products in favour of those from ‘friendly’ countries. India is the world’s top supplier of generic pharmaceuticals with 40% of the US market and 50% in Africa. It will be able to support a drive into Russia – and Central Asia.

INSTC Connectivity

One of the priorities of India and Russia is the development and uninterrupted operation of the International North-South Transport Corridor (INSTC) connecting Russia, Iran, and India, and which is a priority for Moscow, Tehran and New Delhi. The corridor is seen as a secure way for Russia to link with the Global South. With three branches of the corridor running through the Caspian region, Moscow intends to connect with Iran and India. The recent signing of the financing agreement for the last remaining connectivity of the Rasht-Astara railway between Moscow and Tehran is expected give a major boost to India-Russia trade. It should finally be operational towards the end of 2024.

Moscow’s trade push southward falls within Russia’s attempts to implement its Strategy for the Development of Maritime Port Infrastructure within which special attention is paid to the development of the ports on the Caspian Sea in Astrakhan, Makhachkala and Ola. Compared to the traditional route through the Suez Canal, the route along the north-south corridor is 40% shorter and 30% cheaper.


In 2019, bilateral trade amounted to US$11.20 billion, declining to US$9.26 billion in 2020 (covid), while rebounding to US$13.60 billion in 2021. Overall, the covid pandemic was a serious obstacle to the pre-existing growth of Russian-Indian economic cooperation. It did not however derail the overall trend of growing trade partnership between the two countries. For instance, between April 2022 and February 2023, bilateral trade reached a record US$45 billion. Russia moved from 25th to 7th position among Indian trading partners, after the US, China, United Arab Emirates (UAE), Saudi Arabia, Iraq, and Indonesia.

Traditionally, Russian exports to India have consisted of mainly energy-related mineral products (including ore and fuel), and due to the western sanctions, the share of such products in the increased level of Indian imports has already reached 84% of the total. At the same time, the demand for finished steel products in India is not particularly high, and before the imposition of Western sanctions on Russia, its exports accounted for only 4-5% of all Russian deliveries.

Products of the chemical industry in the Indian market are mainly represented by Russian fertilizers, of which nitrogen and complex fertilizers are in the highest demand and are another growth sector. Dr. Ajay Sahai, the head of the Federation of Indian Export Organizations (FIEO) said on June 1 that Russian fertilizer exports to India had reached over US$3 billion in value during the Indian fiscal year 2022-2023 and that Russia was India’s largest source for these products.

Overall, in 2021, Russia exported goods to India worth US$9.13 billion. Almost a third of this volume was mineral products (including ore and fuel), 19.88% were machinery, equipment, and vehicles, 18.44 % – precious metals and stones, 16.08% – products of the chemical industry, 5.5% – metals and products from them, 4.27% – food products and agricultural raw materials. In turn, India exported goods worth US$4.43 billion to the Russian Federation in 2021.
These are mainly chemical products (31.7%), machinery, equipment and vehicles (29.9%), food products and agricultural raw materials (16.34%), metals and metal products (7.69%), textiles and footwear (7.31%). Russia imports from India food products, base metals, animals and animal products, plastics, rubber, rubber, products made of stone, plaster, cement, tools, textile and so on.

In 2022 India displaced Europe as the main buyer of offshore oil from Russia. India increased its imports of Russian oil by 16 times, making up a third of all deliveries to the country. India began buying Russian oil for UAE dirhams and roubles. Purchases of Russian oil allowed Moscow and New Delhi to quickly overcome the US$30 billion bilateral trade target that Russian President Vladimir Putin and Indian Prime Minister Narendra Modi previously agreed to reach only by 2025. This achievement allows the two countries to even set higher standards in bilateral trade.

This trend is continuing in 2023. For instance, exports in Q1 2023 amounted to US$15.5 billion – 4.7 times higher than in Q1 2022. The first place among the suppliers of goods to India still belongs to China, despite the reduction in exports by 15.4%. The UAE became the third supplier ($12.7 billion). The fourth is the United States, the fifth is Saudi Arabia. At the same time, the export of goods from India to Russia increased by a third, to US$946.6 million. The total trade turnover grew 4.1 times (US$16.45 billion). But there are significant bottlenecks, especially in India’s exports to Russia.

To facilitate bilateral trade India and Russia generally converge on the idea to convert payments into national currencies. The two sides are working on the creation of new digital financial instruments, including within the BRICS, which in the future can become the basis for cross-border payments, which will greatly facilitate the expansion of bilateral trade.

Several Russian banks already have an extensive presence in India and serve both Russian and Indian clients. Negotiations on Free Trade Agreement between India and the Eurasian Economic Union are ongoing. These measures are designed to facilitate business interaction not only at the level of the state and state corporations, but also for representatives of medium and small businesses.

Such an FTA makes sense: Russian companies are unlikely to compete with Indian ones for the Indian domestic market except for areas exited by Western businesses, and natural collaborations. Trade would boom, with India also having its eyes on the Central Asian EAEU market of Kazakhstan in particular. It would also help balance the Rouble-Rupee imbalance with Russia able to use is excessive volumes of these to buy back Indian products.

Yet financial obstacles partially remain. For instance, recently it was announced that the consultations between Moscow and New Delhi on trade in national currencies broke down. Trading in rupees does create certain difficulties. The problem is that large amounts of deliveries of Russian oil to India in 2022 and the abandonment of settlements in dollars have create a situation when Russian companies have accumulated huge reserves of Indian currency, which are difficult to spend because Russia does not buy such a quantity of goods in India. Although those discussions and Rupee-Rouble trade has been restored, Moscow cannot at present shift the sheer volume of Indian Rupees it is accumulating. For political problems with China, India is reluctant to trade in RMB Yuan as well.

The use of national currencies in mutual settlements is associated with the restructuring of all financial and economic relations. It is necessary to provide the necessary equivalent for the currency exchange. Intermediate currencies are necessary to compare prices. Difficulties with rates could however be overcome when the scale of trade increases. Moscow and New Delhi also use the UAE Dirham, which is increasingly being considered as the Arabic equivalent of the US dollar and is easily convertible.

There may also be some future rapprochement with China. New Delhi’s relations with Beijing have been problematic since the late 1950’s and related to border issues created in the wake of vagaries associated with the borders of Tibet, as well as China’s long standing support for Pakistan.

Historically, some of these were influenced by Beijing’s desire to keep New Delhi pre-occupied with security issues while it engaged on a decades-long process of economic reform. In 1960, India’s GDP was US$36 billion, today it is 3.2 trillion. To compare, China’s GDP was US$59 billion in 1960 but is now US$4.2 trillion. Should China feel that its policy of deliberately pushing India down has now run its course, then border settlements may be on the agenda – certainly as Messrs Modi and Xi appear to have good personal relations. If so, the addition of India as part of the Global South will also feed directly into its relations with Russia. Moscow of course will be happy to act as a broker.

For now, the immediate future of Russia-India relations looks highly promising – with the caveat of the situation in Ukraine. Is it a matter of making hay while the sun shines, or will something longer term emerge as part of the shifting geopolitical dynamics? Understanding the Russia-India space is a key component of how a post-conflict world will emerge.

Emil Avdaliani is a Professor of international relations at European University in Tbilisi, Georgia, and a scholar of the developing silk roads. Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates and a Visiting Professor at the HSE in St. Petersburg.

Dezan Shira & Associates can assist Russian businesses into the India market and have offices in Delhi, Mumbai and Bangalore. Please contact
The firm also assists Indian businesses in the Russian market. Please email

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