India-Russia trade and its impact on the Indian economy

 

Here’s a write-up about India-Russia trade and its impact on the Indian economy — recent trends, pros & cons, what to watch out for.

---

India-Russia Trade: Recent Snapshot

• In FY 2024-25, bilateral trade between India and Russia stood at around US$ 68.7 billion. (The Financial Express)

• Of that, Indian exports to Russia were modest (~US$ 4.8 billion), while imports (dominated by energy/fossil fuels, minerals etc.) were very large (~US$ 63-65 billion). (India Brand Equity Foundation)

• A big chunk of imports is crude oil and petroleum products; India has become one of the top buyers of discounted Russian crude, especially as western countries impose sanctions. (The Financial Express)

• Trade has expanded dramatically in a few years: approximately a 5- to 6-fold increase since 2021. The trade deficit (exports minus imports) with Russia has also widened sharply. (Indian Defence News)

---

Economic Impacts on India

☑️ Advantages

1. Lower Cost Energy Imports
   Because Russian crude is often available at a discount (relative to other sources due to sanctions and oversupply issues), India saves on import bills. These savings help reduce energy costs domestically, which is significant as India depends heavily on imported oil. (The Financial Express)

2. Refining & Exports
   Indian refiners are increasing their processing of Russian crude. Some of the refined petroleum products are exported (including to Europe), which augments export revenue. This helps balance out, to a degree, the large import bill. (India Briefing)

3. Strengthening Strategic Ties & Diversification
   The partnership helps India diversify its energy supply sources (less reliance solely on Middle East), which is good for energy security. Also, the trade in local currencies / alternative payment mechanisms is increasing, reducing vulnerability to currency/foreign exchange disruptions. (India Brand Equity Foundation)

4. Growth in Specific Sectors
   Imports of things like fertilizers and mineral resources from Russia have helped agricultural and industrial sectors in India where shortages or high import costs would otherwise hamper growth. (India Brand Equity Foundation)

---

⚠️ Challenges / Risks

1. Large Trade Deficit
   The sharp imbalance (much more import than export) means India has a considerable trade deficit with Russia. This can put pressure on the rupee, increase import payments, and affect foreign exchange reserves. (Business Standard)

2. Volatility of Discounts & Sanctions Risk
   The discount on Russian oil has not been stable; sometimes it narrows, reducing gains. Also, international sanctions (especially from US/EU) impose risks: if sanctions tighten, Indian companies may face compliance issues; access to European markets may be restricted for products derived from Russian crude. (India Today)

3. Dependence in a Few Commodities
   Heavy reliance on Russia for oil/fuel means policy or geopolitical disruptions there can hit India’s fuel costs sharply. Also, over-dependence may reduce negotiation power.

4. Export Growth Limited
   India’s exports to Russia are growing, but from a low base, and many of the higher-value or manufacturing exports are much less compared to imports. So benefits are mostly one-way. This limits job creation and industrial spillovers from trade.

5. Reputational / Diplomatic Risks
   With global geopolitical tensions (e.g. Russia-Ukraine war), India’s engagement with Russia may invite pressure from other powers, which could translate into trade/tariff consequences. For example, the US has threatened tariffs or penalties tied to India’s oil imports from Russia. (AP News)

---

What This Means for the Indian Economy Overall

• Inflation & Energy Prices: Savings from cheaper Russian oil help moderate fuel price inflation, which has knock-on effects on costs for transport, industry, and basic goods.

• Current Account / Forex Position: The trade deficit increases pressure on India’s current account deficit. But if the cost savings and export revenue from refined products are sufficiently large, they can offset some pressure.

• Industrial & Manufacturing Growth: Sectors dependent on fertilizers, minerals, or other Russian imports benefit, but if tariffs, sanctions or supply chain disruptions arise, they are vulnerable.

• Policy Implications: The government will need to continue balancing its strategy—using diplomatic channels to manage sanction risk; seeking export diversification to reduce trade deficit; possibly negotiating favorable payment terms or bilateral currency swap/alternate currency use; and investing in downstream/refining sectors so more value is captured domestically.

---

If you like, I can format this as a social media post (LinkedIn / Twitter / Instagram) with an image summary, or pull up a few charts to show trade trends visually?

• AP News
• Reuters
• m.economictimes.com