Like ties between individuals, relations between states remain stable and flourish, despite the vicissitudes of change, when they are governed by a right mix of emotions, shared values, and strong mutual interests. President Vladimir Putin’s short visit to Delhi (December 4-5), imbued with meaningful optics and measurable outcomes, vindicated this maxim. It showed once again that the India-Russia partnership is a time-tested one and will remain so.
The two key questions now are: one, has the visit produced concrete results that show that the India-Russia relationship has strengthened? Two, has the dialogue in Delhi sent out any significant signals to other power centres worldwide? The answer to both questions is in the affirmative.
Without losing sight of the multi-dimensional nature of this relationship, it is evident that the 23rd India-Russia annual summit’s principal focus, or what Foreign Secretary Vikram Misri termed as “the driving impulse”, was to resize economic cooperation by increasing India’s exports to Russia in a balanced and sustainable manner, strengthen industrial cooperation, and forge new investment partnerships. This trip made it clear that an enhanced level of economic and commercial cooperation alone can justify the claim that Russia-India ties are special and advancing constructively, with the changing times.
Hence, the earlier goal of reaching $100 billion in bilateral trade by 2030 was reiterated. Prime Minister Narendra Modi expressed confidence at the end of the Trade Forum discussions that the target could be reached even before 2030. This will depend on expeditious decisions by both governments to remove non-tariff barriers and regulatory impediments, to take trade facilitation measures (primarily to expand India’s exports of pharmaceuticals, agricultural and marine products, and textiles), and to explore new opportunities. This will require fast-tracking the joint work for a Free Trade Agreement on goods between India and the Eurasian Economic Union (EAEU), which is awaiting the second round of negotiations. Businesses on both sides will pick up the momentum thereafter.
Already, many external issues have been addressed. U.S. sanctions on trade in dollars have accelerated the shift towards settling bilateral trade in the national currencies of the two countries. Now, over 90% of India-Russia trade takes place in national currencies, i.e., Rupee-Rouble mode. This will be expanded to enable “the interoperability of the national payment systems, financial messaging systems, as well as central bank digital currency platforms.” Even more significant is the financial innovation under consideration: permitting those Indian rupees accumulated by Russian companies to be invested in Indian stock exchanges. This will positively incentivise Russian firms to convert their large existing rupee surpluses into investments in finance, pharma, energy, and other fast-moving sectors with clear prospects of lucrative profits.
An agreement was reached in another substantial area: that of labour. The Russia-Ukraine war has created a labour shortage, and Indian blue-collar labour, with its extensive experience in the Gulf, will now be welcome in Russia across sectors such as construction and factory deployment. India’s white-collar engineering and IT skills, whose global positioning has taken a hit under the new U.S. visa regime, now have an attractive option in Russia, where hardware skills will blend well with software knowledge.
Regionally, Modi and Putin discussed connectivity initiatives such as the International North-South Transport Corridor, the Chennai-Vladivostok (Eastern Maritime) Corridor, and the North Sea Route in detail. These will show progress once logistics links are expanded and infrastructure capacity is enhanced.
Among the 16 MOUs signed on various forms of collaboration, the one for the setting up of a joint venture for urea manufacturing in Russia by Indian companies is significant, as imports of fertilisers from Russia have been substantial in the past. This aligns with the ‘Make in India’ initiative, which Russia has been cognizant of and sensitive to. It has been extended to defence engagement as well, with a focus on research collaboration, technology transfer, and joint production. While there were no new announcements on purchases or projects, it is clear that India’s needs match Russia’s capabilities, leading to a stepped-up defense cooperation. Delays in supplies of Russian equipment contracted earlier are to be addressed, smoothing the path ahead.
Energy and defence cooperation remain strong pillars of bilateral relations. The U.S. sanctions on Russian oil companies have complicated the situation, but India’s need for Russian oil to ensure energy security for its people is imperative. Russia’s reassurance has been welcome, offering “uninterrupted supply” of coal, gas, and oil to India. Regarding nuclear energy, several forward-looking measures were discussed and agreed upon to broaden cooperation, including through the fuel cycle for India’s largest nuclear power plant, Kudankulam.
As to the question of whether the dialogue in Delhi sent out any significant signals to other power centres in the world, the Putin visit was clearly a meaningful geopolitical moment, coming as it did after the buzz about an emerging G2 of the U.S. and China, and the new Troika of Russia, China, and India. The calibrated signal sent to the U.S. was that its poor handling of ties with India has driven the latter into a closer embrace of Russia, and that India indeed has other options. Yet it remains open to returning to a close relationship with Washington, provided its national interests, dignity, and strategic autonomy are not challenged.
China may also have internalised the conclusion that while Russia and China maintain a ‘no limits partnership’, Russia is resolved to continue upgrading its equation with India to ensure a better balance in its bilateral relationship with China. The signal from Delhi to Beijing called for the latter to be more conciliatory and sensitive to India’s concerns, following the Russian example.
The implications for Europeans seemed even clearer: India and Europe disagree on Russia; therefore, they must build their relationship, keeping this fundamental divergence in mind. Once the Russia-Ukraine conflict is resolved through a peace settlement, a new dynamic may emerge, mainly because Europe is indeed divided on the issues of war and peace with Russia.
Two of the longest-serving leaders of the leading powers – Vladimir Putin and Narendra Modi – conveyed very strong statements to their global peers: that, in addition to better bilateral relations, the world needs more effective multilateral arrangements to provide a firm basis for fair peace, security, and prosperity for all. In this larger context, the template of the India-Russia relationship, time-tested and productive as it has been, can be a model.
Rajiv Bhatia is the Distinguished Fellow for Foreign Policy Studies and a former ambassador.
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