Trade between India and Russia has taken on new dimensions, particularly with the recent push to increase local currency transactions between the two nations. Recently, Denis Manturov, Russia’s First Deputy Prime Minister, indicated at the 25th Session of the Intergovernmental Russian-Indian Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation, held on November 12, 2024, how nearly 90% of bilateral trade is now conducted using local or alternative currencies. This monumental development has been influenced heavily by geopolitical factors, especially following the restrictions placed on Russia due to the Ukraine crisis.
This shift began back when the Reserve Bank of India (RBI) permitted trade transactions to be denominated in Indian rupees starting July 2022. This policy was introduced as part of India’s strategy to create alternate payment methods after Western nations imposed sanctions on Russia, effectively barring it from the dollar-denominated trading system. Manturov highlighted the importance of this arrangement, stating, “Share of local and alternative currencies keeps growing in bilateral trade. It is now approaching 90%.”
During the session, the two countries reaffirmed their commitment to expand economic ties, not just by relying on traditional markets but by diversifying their trade portfolios. India has been importing a variety of goods from Russia, particularly energy products like crude oil, coal, and fertilizers. The trade balance, though heavily tilted, is expected to be addressed with new strategies aimed at fostering Indian exports to Russia, which are currently lagging far behind imports.
Statistics reveal the extent of this trade imbalance. For the fiscal year 2023-24, it was reported the total trade volume skyrocketed to $65 billion, with Indian exports barely scratching $4 billion compared to imports of around $61.4 billion. The aim going forward is to adjust this imbalance, with future plans mentioning the ambition to reach $100 billion worth of bilateral trade by the year 2030. Manturov emphasized, “Tasks on the expansion of product range as well as shortening the trade imbalance will be enshrined... by 2030.”
The appeal here is obvious: both nations want to solidify and diversify their trade relations, focusing on energy, agriculture, and manufacturing. Mutual agreements included discussions on future cooperation in various fields, including nuclear energy, digital technologies, and logistics. The Russian Deputy Prime Minister went as far as to suggest India’s role as ‘a strategic partner’ for several international logistics projects, which include the northern sea route and the North-South corridor.
Another significant area of interest was the exploration of free trade agreements (FTA) between India and the Eurasian Economic Union (EEU) of which Russia is a key member. This agreement could open doors for easier trade processes and potentially encourage more Indian businesses to enter the Russian market. There was already one round of talks concerning this FTA, indicating both countries are serious about forging new pathways to facilitate trade.
On the Indian side, External Affairs Minister S. Jaishankar responded positively to these discussions, stating, “We believe we can achieve the targeted trade figures sooner than 2030, provided we continue to streamline our efforts.” He noted the importance of enhancing commercial ties and making educational exchanges easier, aiming for simplified procedures for mutual recognition of educational credentials.
The growing ties aren’t limited to trade; they extend to cultural and academic exchanges too—both nations are working on easier recognition of degrees and academic documents, aiming to deepen people-to-people connections. This initiative was highlighted as being particularly important as both countries look to cultivate more exposure and interaction between their citizens.
The joint session also discussed boosting connectivity between the two nations, particularly through the aviation sector. Currently, direct flights operate solely through Russian carriers like Aeroflot, but Manturov voiced intentions to facilitate the resumption of Indian airline operations to Russia, emphasizing the need for increased flight frequencies and expanded route networks.
Another area of focus is India's burgeoning role as a supplier of various other goods—including pharmaceuticals, food products, and industrial if you can believe equipment—to Russia, strengthening its presence beyond mere commodities. With Indian imports to Russia wanting to include more than just energy supplies, enhancing the scope of available trade options is seen as necessary.
The latest discussions wouldn’t be complete without addressing investment opportunities, which are surging thanks to these improved trading conditions. The session also highlighted the potential for joint investments and projects, setting up businesses on both ends to understand each other's market needs more efficiently. There’s talk of creating joint ventures, especially within tech-centric industries which are perceived as both urgent and lucrative targets for both economies.
With the backdrop of these talks shining light on ambitious trade targets and future collaborations, maintaining this momentum is going to be key. Not only will it be about meeting the projected $100 billion target by 2030, but also ensuring the partnerships formed can withstand and adapt to the changing global trade climate.
These working discussions are paving the way for not just economic agreements but will potentially strengthen India’s geopolitical stance amid shifting global alliances. The burgeoning relationship between India and Russia offers not just promises of economic collaboration but also invites more substantial dialogue about shared interests and goals on the international stage.
Overall, these talks reaffirm the commitment between India and Russia to forge stronger ties, seek common ground, and create mutually beneficial relationships as they navigate the current economic climate. The tangible results of these discussions could reshape how both countries engage with each other economically, culturally, and politically for years to come.
Such developments signify continued growth for both nations as they make strides toward reducing trade deficits, increasing trade volumes, and fortifying their statuses within the global economic framework. With local currency trading becoming more prevalent, both India and Russia appear poised for what could be the beginning of something impactful on the world trading stage.
