India and Russia: a strategic economic partnership

Russian President Vladimir Putin is expected to visit India soon while the exact dates have not been finalised.

According to a Russian official after the two visits of Indian Prime Minister Narendra Modi to Russia, Putin will be visiting India.

The two governments will discuss the geopolitical situation, bilateral trade, investments and others.

The recent Russia-India Business Forum held in Mumbai marked a significant milestone in the burgeoning economic relationship between the two nations.

The event, jointly organised by the Moscow Government and the Federation of Indian Chambers of Commerce and Industry (FICCI), set an ambitious target of achieving a $100 billion trade turnover by 2030.

Presently the bilateral trade between the two nations stands at about  $66 billion with major items of export from India include pharmaceuticals, organic chemicals, electrical machinery and mechanical appliances, iron and steel totaling to just over $4 billion.

On the other hand major items of import from Russia include oil and petroleum products, fertilisers, mineral resources, precious stones and metals, vegetable oils and others amounting to about $62 billion.

In terms of value, bulk of the Indian imports is accounted for by oil sold at a discount after the Russia-Ukraine war.

According to the Ministry of External Affairs, Government of India, the bilateral investments between the two countries remain strong and surpassed the previous target of $30 billion in 2018, leading to a revised target of $50 billion by 2025.

The major bilateral investments by Russia in India are in the oil and gas, petrochemicals, banking, railways and steel sectors, while Indian investments in Russia are mainly in oil and gas and pharmaceuticals sectors.

A historical perspective

The India-Russia relationship, rooted in history, has evolved into a strategic partnership with a strong emphasis on economic cooperation. Both nations share a common vision of a multipolar world order and have been working together to address global challenges.

In recent years, India and Russia have intensified their economic engagement, driven by mutual interests and complementary strengths.

India, with its burgeoning middle class and rapid economic growth, offers immense potential for Russian businesses, while Russia, with its rich natural resources and advanced technology, can provide critical inputs for India's development.

The key areas of cooperation between the two nations are:

1. Energy:

• Oil and gas: Russia, a major energy exporter, can supply India with crucial energy resources, including crude oil and natural gas.
• Nuclear energy: Both countries have a strong partnership in nuclear energy, with Russia providing advanced nuclear technology and expertise to India's ambitious nuclear power programme.
• Out of the six 1,000MW nuclear power plants, Russia has completed supplies of two and the supplies for the balance are on.
• The Nuclear Power Corporation of India Ltd (NPCIL) is operating two nuclear power plants supplied by Russia in Tamil Nadu’s Kudankulam and  the process of building the remaining four plants.
• Russia is also keen on supplying small modular nuclear  reactors to India.

2. Defense:

• Military equipment: Russia has been a traditional supplier of military equipment to India, and the two countries have collaborated on various defense projects.
• Joint ventures: India and Russia have explored opportunities for joint ventures in defense manufacturing and research. One of the notable defense joint ventures is the BrahMos Aerospace that makes missiles.

3. Trade and investment:

• Diversification: Both countries are keen to diversify their trade and investment relationships, reducing dependence on traditional partners.
• Infrastructure: Russia can provide expertise and technology for India's ambitious infrastructure projects.
• Technology transfer: Russia's advanced technology, particularly in fields like aerospace and nuclear energy, can be transferred to India.

4. Far East development:

• Economic corridor: India and Russia are exploring the potential of developing an economic corridor connecting India's eastern coast with Russia's Far East.
• Investment opportunities: The development of Russia's Far East offers numerous investment opportunities for Indian businesses, particularly in sectors like mining, agriculture, and tourism.

Russia’s integrated nuclear sector company Rosatom said the two countries are discussing joint shipbuilding projects in the Arctic region, training of Indian sailors on polar navigation and others connected with the Northern Sea Route.

Rosatom is the infrastructure operator of the Northern Sea Route.

The Indian shipyards may be involved in making non-nuclear icebreakers as Rosatom makes and operates nuclear icebreakers  in Russia.

The Northern Sea Route is about 5,600 km of sea route in the Arctic waters under Russia’s exclusive economic zone. It is also the shortest route connecting the western part of Eurasia and the Asia-Pacific region.

At the global nuclear sector conference AtomExpo held in Sochi, Russia early this year, an official at the Indian Embassy in Russia had said the Northern Sea Route will be another ocean route for India to add to its energy security and others.

He said Eastern parts of India will be connected with Russia when Chennai and Vladivostok are connected and there will  be a saving of about 40% time and  cost.

Now the route is used when ice melts. However Russia believes the route is navigable throughout the year owing to climate change and this can be an alternate route for the Suez Canal.

India’s interest in the Northern Sea Route is to make it a part of its port-led development programme in Sagarmala – port-led development of cities.

On July 8, 2024, a meeting was held between Indian Prime Minister Narendra Modi and the Russian President  Vladimir Putin.

Following the meeting, the parties announced that they encourage cooperation in developing maritime transport between the countries along the Northern Sea Route.

One of Rosatom’s strategic goals is to make the Northern Sea Route NSR an effective shipping artery connecting Europe, Russia and the Asia-Pacific region.

Rosatom said the ongoing project is the preparation of a federal project to develop the Great Northern Sea Route – a transport corridor from St. Petersburg and Kaliningrad to Vladivostok, in Russia.

Challenges and opportunities

While the India-Russia economic partnership holds immense promise, several challenges must be addressed:

• Geopolitical factors: The evolving geopolitical landscape, particularly the ongoing Russia-Ukraine conflict, could impact bilateral relations and trade flows.
• Logistics and infrastructure: Improving connectivity and logistics infrastructure between the two countries is crucial for boosting trade.
• Financial mechanisms: Developing robust financial mechanisms, such as rupee-ruble trade, can facilitate bilateral trade.

Despite these challenges, the long-term potential of the India-Russia economic partnership remains significant. By leveraging their complementary strengths and addressing the challenges, the two nations can forge a stronger and more resilient economic relationship.

The Russia-India Business Forum served as a platform to strengthen bilateral ties, explore new avenues of cooperation, and reinforce the strategic partnership between the two countries. As both nations strive to achieve their economic goals, the India-Russia partnership is poised to play a pivotal role in shaping the global economic landscape.

One of the major steps in  advancing bilateral cooperation is encouraging Indian businesses to participate in Russia’s largest economic events, such as the St. Petersburg International Economic Forum (SPIEF), the Eastern Economic Forum (EEF), and other forums organized by the Roscongress Foundation.

The St. Petersburg International Economic Forum will take place from June 18 to 21, 2025.