INDIA-RUSSIA

• The highest institutionalized dialogue mechanism in the strategic partnership between India and Russia is the Annual Summit meeting between the Prime Minister of India and the President of the Russian Federation.
• Prime Minister Narendra Modi and President Vladimir Putin held their first informal Summit in Sochi, Russia, in 2018.
• In 2019, President Putin awarded PM Narendra Modi Russia’s highest state decoration, The Order of St Andrew the Apostle, for his distinguished contribution to the development of a privileged strategic partnership between Russia and India.
• Two Inter-Governmental Commissions – on Trade, Economic, Scientific, Technological, and Cultural Cooperation (IRIGC-TEC) and Military-Technical Cooperation (IRIGC-MTC) – meet annually.
• India-Russia military-technical cooperation has evolved from a buyer-seller framework to joint research, development, and production of advanced defence technologies.
• Joint military programs include the BrahMos cruise missile, 5th generation fighter jet, Sukhoi Su-30MKI, Ilyushin/HAL Tactical Transport Aircraft, KA-226T twin-engine utility helicopters, and some frigates.
• India has acquired military hardware from Russia, including the S-400 Triumf, Kamov Ka-226 (made in India under Make in India), T-90S Bhishma, INS Vikramaditya aircraft carrier, and submarines.
• Russia is a crucial partner for India in peaceful nuclear energy use, with cooperation in the Kudankulam Nuclear Power Plant (KKNPP) in India and the Rooppur Nuclear Power Project in Bangladesh.
• Cooperation in outer space includes satellite launches, the GLONASS navigation system, and joint activities in the field of the Human Spaceflight Programme.
• Institutional mechanisms for bilateral Science and Technology cooperation include the Working Group on Science and Technology, the Integrated Long-Term Programme (ILTP), and the Basic Science Cooperation Programme.
• Cultural ties involve the teaching of Hindi and other Indian languages in Russian institutions, as well as the promotion of Indian dance, music, yoga, and Ayurveda in Russia.

Strategic Partner

• Military Powerhouse: Russia provides crucial access to advanced weapons and military technology, vital for India's security interests against regional rivals like China and Pakistan.
• Nuclear Fuel Supplier: Russia is a key source of nuclear fuel for India's growing nuclear power program, ensuring energy security and independence.
• Political Ally: Russia supports India's position on key issues like Kashmir and UN reform, offering diplomatic backing and counterbalancing Western pressure.
• Counterbalance to the West: Russia's partnership helps India diversify its foreign relations and hedge against Western dominance, promoting a multipolar global order.

Economic Partner

• Trade and Investment: Bilateral trade is growing, though below potential. Both nations aim to increase it significantly, offering mutual economic benefits.
• Emerging Areas of Cooperation: New sectors like mining, agro-industrial, and high technology (robotics, nanotech, biotech) hold promising potential for collaboration and economic growth.
• Connectivity Projects: India's participation in Russia's Arctic and Far East development initiatives can open up new avenues for trade and resource access.

Security Collaborator

• Joint counter-terrorism efforts: Both nations face similar threats and collaborate on intelligence sharing, training, and operations to combat terrorism.
• Afghanistan crisis: Both have concerns about the situation in Afghanistan and cooperate to promote stability and prevent the resurgence of extremist groups.
• Space Exploration: Collaborative projects in satellite launches, navigation systems, and human spaceflight programs strengthen scientific and technological advancements.

• 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.

Geopolitical

• Ukraine War: Russia's invasion of Ukraine has strained its relations with the West, potentially impacting India's ties with both nations. India's neutral stance faces increasing pressure to condemn Russia, creating a delicate balancing act.
• China's Shadow: Russia's close relationship with China, India's geopolitical rival, creates friction and uncertainty. While Russia played a mediating role in the Ladakh border tensions, its alignment with China raises concerns for India's security interests.
• Diversifying Foreign Policy: India's growing engagement with the US and other Western powers could further complicate the relationship with Russia, potentially leading to strategic competition and conflicting interests.

Economic

• Trade below potential: Bilateral trade between India and Russia remains below its potential, despite ambitious goals to increase it significantly. This could be due to factors like infrastructure limitations, lack of diversification, and competition from other trading partners.
• Investment gaps: While both countries desire increased investment, attracting Russian investment to India remains a challenge. This could be due to concerns about regulatory hurdles, bureaucratic complexities, and competition from other investment destinations.
• Energy dependence: India's reliance on Russia for critical resources like nuclear fuel and military equipment creates vulnerability to potential disruptions in supply or price fluctuations. Diversifying energy sources and arms imports is a long-term goal, but comes with its own challenges.

Strategic

• Shifting military landscape: India's efforts to diversify its arms imports and develop its own defence capabilities could gradually reduce its dependence on Russian military technology. This could potentially weaken the strategic partnership in the long run.
• Differing priorities: While both nations share some strategic interests, their priorities may not always align perfectly. This could lead to disagreements on issues like regional security, international sanctions, or global governance.
• Domestic politics: Internal political dynamics in both countries can also impact the relationship. Changes in leadership or shifts in public opinion could lead to changes in priorities or policies, potentially creating uncertainty and instability.