Bilateral trade between Russia and India will follow a path to reach US$40 billion as exports of cheap oil rise

Bilateral trade between Russia and India will follow a path to reach US billion as exports of cheap oil rise

Settling in India can ease EU energy crisis as cheap energy boosts productivity and GDP growth

The Ukraine conflict is having the effect of significantly boosting Russia’s trade with numerous nations, as the world’s biggest energy player seeks new markets in the wake of Western-imposed energy sanctions.

Trade with India, which Russian President Putin and Indian Prime Minister Modi had previously set as a target of US$30 billion by 2025, is set to far exceed that figure, three times ahead of schedule.

India’s bilateral trade with Russia has reached a record US$18.2 billion between April and August, according to the Indian Ministry of Trade and Industry. Combined, that indicates a 12 monthly level of US$43.2 billion. This has been fueled by an increase in oil and fertilizer imports.

Source: Indian Ministry of Commerce and Industry

When the conflict with Ukraine broke out in February, many nations, including India, scrambled to find trade alternatives for the commodities Russia was exporting. Moscow then provided discounts to encourage energy production and supply to alternative energy markets. India’s energy needs, for example, according to the Central Electricity Authority (CEA), an advisory body to India’s Federal Ministry of Energy, has said that India’s energy demand would reach 1.874 billion units for March 2027, compared to 1.320 billion units in the fiscal year ending. March 2022.

Moscow offered discounts on Russian crude oil and fertilizers to ensure India kept up the trade and to illustrate to New Delhi that it could meet India’s growing needs. As a result, Russia is now India’s seventh largest trading partner.

India’s imports from Russia have typically included petroleum oil and other fuels and fertilizers, mixed with consumables such as coffee and tea, spices, and animal and vegetable fats. Currently, fertilizers and fuel alone accounted for more than 91% of bilateral trade in 2022. In September, Russia became India’s second largest supplier of crude oil.

However, despite the current responsibility for oil and fertilizers, Russia will still have to be competitive. New Delhi is not a client state because it is pro-Russian or anti-Western. It is purely a matter of economic reality. India is likely to continue to import more Russian crude into late 2022 as refiners ramp up output to meet seasonal increases in domestic demand and higher export demand from Europe, as the northern Indian winters begin and Europe. Temperatures in Delhi can drop into the single digits. during December-February and lower in the Himalayas.

That said, the Indian economy is currently growing at just over 4%, as the EU economies head into recession. That, and cheaper energy supplies suggest that European manufacturing industries will begin to invest in India to produce for European markets and further fuel India’s growing demand for energy. Russia will seek to supply that need.

However, while the concentration of India’s trade with Russia is in energy, opportunities exist elsewhere. Non-energy products are starting to make inroads in Russia, both in terms of substituting Western products, but also because Russia has legalized parallel imports. While the West has banned Russia from receiving imported luxury brands, for example, countries like India are developing a middleman route and savvy entrepreneurs and traders are buying Western products and reselling them to Russian consumers. These include everything from air conditioning units and iPhones to Bentley cars. An example of this trade is seen when the new Apple iPhone 14, released after the sanctions, was on sale a week after the official launch in Russian online stores. Volumes are high enough on the Russian market to mean that Russian consumers pay only 10-15% more than what the Russian retail price would have been under normal circumstances. Western manufacturing industries, and especially those in the EU, will seek, from 2023, to establish manufacturing plants in India to take advantage of lower energy costs in India, to meet their domestic demand and to supply the Russian market of the they have been dating. .

There is more information on settling in India in this article. here.

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About us

Briefing on Russia is written and produced by Dezan Shira & Associates. During these uncertain times and the imposition of sanctions, our firm helps Russian companies relocate to Asia and provides financial and sanctions compliance services to foreign companies operating in Russia. We also provide market research and advisory services to foreign exporters interested in Russia as the economy seeks to replace products of Western origin. Please contact us at or visit us at

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