With New Delhi defying the western sanctions on Russia, the volume of trade between India and the former Soviet Union nation already surpassed the target Prime Minister Narendra Modi and President Vladimir Putin had set for 2025 when they had held the last annual summit in December 2021.
New Delhi, however, is concerned about the widening trade deficit that came with the surge in bilateral commerce. As External Affairs Minister S Jaishankar and Russian Deputy Prime Minister Denis Manturov co-chaired the 24th session of the bilateral Inter-governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation, New Delhi conveyed to Moscow that the two sides should urgently work together to address the issue of trade imbalance.
Manturov, who was on a visit to New Delhi, also met Finance Minister Nirmala Sitharaman on Tuesday and discussed with her the necessary steps the two governments should take to ensure uninterrupted mutual settlements, primarily with use of national currencies – Rupee and Rouble – were discussed.
When Modi and Putin had held the last annual summit in New Delhi on December 6, 2021, the two leaders had set a target for India and Russia to take the bilateral trade up to $30 billion by 2025.
Manturov, however, said on Tuesday that the trade turnover between India and Russia, according to the last year’s results, had gone up by 2.6 times to already exceed $35 billion. “We have completed ahead of schedule the task set by the leaders of our countries,” he noted while co-chairing the meeting of the intergovernmental commission with Jaishankar.
Jaishankar had on Monday stated that the volume of India-Russia bilateral trade between April 2022 and February 2023 had in fact reached $45 billion and would continue to grow.
New Delhi refrained from joining the United States and other western nations in condemning Russia’s aggression against Ukraine, primarily in view of its decades-old strategic partnership with Russia and its continued reliance on military hardware procured from the former Soviet Union nation.
Ever since Putin ordered the launch of special military operations in Ukraine in February 2022, India over the past 14 months circumvented the US sanctions and continued its trade and economic engagements with Russia. It also increased its crude oil import from Russia, taking advantage of the discounted price offered by the former Soviet Union nation after being hit by the western sanctions.
Russia’s share in India’s crude oil import rose from just 0.2% to 28% in January 2023. This not only resulted in the exponential growth in bilateral trade volume, but also widened India’s trade deficit with Russia from $4.86 billion in April, 2021-January, 2022 to $34.79 billion during the same period in 2022-23.
“Addressing that imbalance really means addressing the impediments – whether they are market access impediments, whether they are Non Tariff barriers, whether they are related to payments or to logistics,” Jaishankar said in a business event he and Manturov addressed on Monday.
Manturov had a meeting with Commerce Minister Piyush Goyal too and discussed “current issues and prospects for (Russia-India) cooperation in such industries as railway and heavy machinery, aircraft building, shipbuilding, metallurgy and the chemical industry”, according to Moscow’s diplomatic mission in New Delhi.