A changed India-Russia equation

The Aeroflot flight from Delhi to Moscow is a reflection of how much has changed between the West and Russia and, concurrently, between India and Russia.

The Delhi-Moscow flight is 5.5 hours, covering a 4,300 km distance – a nano connection these days compared to the 12 hours it takes to fly from Berlin to Moscow, just 1,600 km away. The ongoing Russia-Ukraine war and the subsequent sweeping sanctions imposed on Russia by the West are the culprits of this lack of direct connectivity.

Aeroflot itself is crisp and efficient, with new Airbus and Boeing aircraft acquired for two decades, up to 2014, when Crimea sanctions were imposed. It was a packed flight- with Russians and Indians. Conspicuously absent were the tourists from Europe who transfer in Moscow for Delhi, taking advantage of the competitive fares and a pleasant stopover in Moscow. Conspicuous, instead, were the Indian blue-collar workers going to work.

While accurate numbers are hard to come by, anecdotes suggest that Russia is the latest foreign destination for Indian workers. There, they work as loaders[1] and cleaners, mostly unskilled young men from Jharkhand, U.P, Bihar, Odisha, Punjab, Haryana, and Kerala. In terms of work, Russia is a more equal society to work in compared to the Gulf states, and salaries are more competitive, up to Rs 6000 a day for some jobs. They are augmenting the workforce of Central Asians who traditionally provide labour in Russia,[2] especially now that Moscow has increased the number of soldiers it sends to the war front.

For India, this is a good development since it has a surplus of unemployed young men, and the export of labour is its stated goal. “India is now poverty-free with a large labour supply. In the next 10 years, additional labour from India, both skilled and unskilled, will be the largest in the world,” says Surjit Bhalla, former executive Director for India at the IMF. These workers may help offset part of India’s ballooning trade deficit with Russia, which stood at nearly $60 billion in 2024-25. Since the beginning of the Special Military Operation in Ukraine in Feb 2022, India has become a major buyer of Russian oil, with surpluses available due to the EU shunning Russian energy. However, wide-ranging U.S. sanctions on Russia – seven statutory sanctions on over 9,000 entities and individuals so far – have made payments difficult. While both countries can carry out trade in bilateral currencies, the large imbalance means Russia is left holding tens of billions of dollars’ worth of Indian rupees, creating an unsustainable situation. The movement of Indian workers to Russia, though small, can reduce the imbalance.

The labour movement also signifies that the Russian economy, which was projected to collapse following Western sanctions in 2022, continues to do well. The country grew at robust rates of 3.6% to 3.8% during 2023 and 2024, compared to the less than 1% growth in the EU, formerly Moscow’s top trading partner. The unemployment rate in December 2024 was down to 2.3%.[3]

The disconnect with the West is visible in several other spheres. Western brands such as Starbucks and McDonalds have exited, and these franchises have been acquired and are being operated by local entrepreneurs. Something similar has happened with consultancy firms such as PwC and McKinsey, with Russian operations taken over by local partners and operating as separate entities. Even GPS doesn’t work accurately in Moscow any longer, unable to update its positioning, particularly after drone strikes in some areas, including the Kremlin, by Ukraine. While Moscow is still a beautiful European city, its streets and high-end shopping centres are without the usual bustle and glamour that the European tourist or businessperson brought in. It feels very much like the era of the Cold War when, in several areas, there was a complete break with the West.

The space vacated by the West has been occupied by China. The Chinese presence in Moscow is ubiquitous, right from the airport, with 55 daily flights to multiple Chinese cities – more than any other country. In 2023, 244,000 Chinese tourists visited Moscow. In the city, Chinese automobile showrooms, electronics stores and restaurants are a common sight. These reflect Russia’s increasing dependence on China since the start of the war, something many Russians are conscious of, and seek to reduce, with Indian help.

There is an intense curiosity about India in Russia amongst business and academia alike. However, this is not reciprocated. Indian companies, mostly from the private sector, are reluctant to do business in/with Russia, fearing the impact of American sanctions. Even the public sector is cautious – with just a single Indian bank branch (SBI-Canara joint venture) operational in Russia. Connectivity initiatives, such as the International North-South Transport Corridor – which seeks to connect India, Iran, Central Asia and Russia – have shown little progress on the ground. As India seeks resources such as energy and critical minerals for its growth, Indian companies are avoiding the world’s largest, and one of the most mineral-rich regions.

The broad consensus in Russia is that ties with the West are unlikely to normalise, and its future lies with the East, despite the ongoing talks between the Kremlin and the White House. For India, Russia presents a significant economic opportunity. President Putin and Prime Minister Modi, at the bilateral summit in 2024, set a goal of achieving trade of $100 billion by 2030. Apart from sending better-skilled manpower to Russia, this will involve encouragement and incentives from New Delhi for the small and medium sectors to step into the business of pharmaceuticals, hospitality and agriculture and for India to deepen collaboration with Russia in high-tech areas like artificial intelligence, quantum computing, nuclear energy, space and oceanic sciences.

For this to fructify, there is much work to be done for a “rapid and smooth reorientation towards each other,” says Arvind Gupta, Russia expert and Director of Delhi-based think tank Vivekananda International Foundation. This includes lifting barriers, especially regulatory, currency and customs, crafting a no-visa regime, and moving to a market economy model of collaboration.

“The India-Russia relationship should be viewed not through the bilateral prism, but through a global prism,” says Pankaj Saran, former Indian Ambassador to Russia and deputy National Security Advisor. At this turning point in world affairs, India has the capability to rebuild and to help Russia rebuild. He adds, “We have done it in the Gulf, with the US, in Canada and even Latin America; Russia is a natural partner.”

Manjeet Kripalani is Executive Director, Gateway House.

Amit Bhandari is Senior Fellow for Energy, Investment and Connectivity, Gateway House.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

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References:

[1] 1. Ivanov, Yevgeny and Singh, Ashish Kumar, “Russian Labor Market and Its Prospects for Indians,” Countercurrents, April 28, 2022, https://countercurrents.org/2022/04/russian-labor-market-and-its-prospects-for-indians/.

[2] Kamalakaran, Ajay. “Central Asians Are Central to Russia’s Economy.” Gateway House, September 8, 2022. https://www.gatewayhouse.in/central-asians-central-russia-economy/.

[3] “Unemployment in Russia Remains at 2.3%, Real Disposable Incomes Grow 8.4% in 2024 – Mishustin.” Interfax, February 7, 2025. https://interfax.com/newsroom/top-stories/109659/#:~:text=According%20to%20previously%20published%20Rosstat,to%20be%20tracked%20in%201991.