Russia has built a covert trade route to acquire critical electronics from India for its war in Ukraine, the Financial Times reported on Wednesday, citing leaked government documents and anonymous sources.
According to the report, Russia has secretly acquired sensitive goods in India and considered establishing facilities there to support its war against Ukraine.
The publication reported that Moscow has planned to spend approximately Rs 8,400 crore on securing critical electronics and dual-use technologies, bypassing Western export controls. These components, including parts for telecommunication, server and other complex electronic equipment, have both civilian and military applications, making them subject to Western export controls.
According to FT, Moscow-based Consortium for Foreign Economic Activity and International Interstate Cooperation in Industry (Ved MMKP)'s report detailed the plans to carry out transactions through a “closed payment system" between Russian and Indian companies to evade Western scrutiny. An unnamed Western official described the consortium as a likely “front” for Russian intelligence.
Russia viewed India as an alternative market for crucial components and explored investment in Indo-Russia electronics development, even as India strengthened ties with the US under Prime Minister Narendra Modi.
Russia has amassed Indian rupees from booming oil sales to India amid sanctions, with trade between the two nations almost doubling to $65 billion in 2023.
While it is unclear how Russia executed its covert trade plan, customs filings show that Indian exports of sensitive electronics, as listed in the Ved MMKP’s report, increased significantly from mid-2022, the FT report said.
According to the FT, an Indian company -- Innovio Ventures -- supplied at least $4.9 million of electronic equipment, including drones, to Russia and $600,000 of goods to Kyrgyzstan. The report citied custom filings in which transactions were settled in rupees.
An Indian businessman told FT that Russia is planning to establish facilities in India and scoping work in this regard has already been carried out.
Russia will use the rupee pile up to manufacture dual-use items and low value electronics items that are found in washing machines or refrigerators, the Indian businessman told the publication.
Another source told FT that Russia could use the additional funds to invest in the joint ventures in India for electronics factories needed to meet the needs of Russian critical information infrastructure.
While India continues to buy oil from Russia and is reportedly also supplying other military technology, the Modi government has been trying to mediate the situation between Russia and Ukraine. Further, there are Indians who are caught in the situation, having been duped into joining the war's frontlines. Even as India tries to get them back, it seems India's 'interventions' might just be fuelling the long-brewing conflict in Europe.