Barely a year after US President Joe Biden hosted Indian Prime Minister Narendra Modi at the White House to much fanfare, it’s the Kremlin now that is courting India’s leader in much the same way. US efforts to woo India to its side—or the West—in a world riven by geopolitics may seem to have failed, as both Modi and Russian President Vladimir Putin sang paeans to the two nations’ enduring friendship on Tuesday.
Sure, misgivings have emerged in the West and Ukraine’s leader has expressed concerns. But New Delhi’s parallel ties with Moscow aren’t something that should make the Western bloc uneasy. With China and Russia in a “no-limits” pact, India can plausibly act as a channel of communication with Russia in an attempt to settle the conflict in Ukraine.
New Delhi’s geopolitical neutrality could grant it the role of an intermediator trusted by both sides. Although its peace-securing exertions are yet to come good, attempts by other countries’ leaders having fallen flat means the West may need to depend on India.
Notably, White House spokesperson Karine Jean-Pierre alluded to such an eventuality: “We believe India’s long-standing relationship with Russia gives it the ability to urge President Putin to end his brutal war, an unprovoked war in Ukraine.” This is an opportunity for a global legacy that India must not let pass, even if it is difficult to pull off.
That said, it’s bilateral economic ties that took centre-stage during Modi’s Moscow visit. Among the agreements struck, the most prominent is a plan to boost bilateral trade to $100 billion by 2030. Trade has already leapt up from the $10 billion level a few years ago. Western sanctions imposed on Russia after its 2022 invasion of Ukraine resulted in Russian oil being shipped in large volumes at a discount to Indian ports.
Turned away by Western buyers, Russia found an eager consumer of its exports in India, which was glad to find an oil-shock absorber that could help keep local inflationary pressures in check. These imports have also helped soften the impact on global oil prices of the war in Europe by reducing Indian demand in the global full-price market. The deal’s effect is visible in our trade data.
Taken together, our exports to Russia and imports from there jumped to $65.6 billion in 2023-24, more than six times the pre-pandemic figure. While this makes the target of $100 billion by 2030 look achievable, there lies a problem in its composition, with the balance of trade tilted heavily in Russia’s favour.
We ran up a whopping $57 billion trade deficit with Russia last year. In other words, what we exported was only a small fraction of what we imported. Unless this skew is corrected, scaling up bilateral trade may not prove sustainable. With Russia denied access to global dollar payment systems, this concern assumes even more importance.
Rupee or rouble settlements will work only if trade is better balanced. Russia would resist being saddled with a stash of rupees if there’s little it can buy with it. Hence, like China, we must ship vast volumes of our products to Russia. For this, India must emerge as a global manufacturing hub.
India’s global heft would also be easier to exercise if large markets grow reliant on supplies from here. Economic success arguably makes more space for strategic autonomy than a game of equidistance from geopolitical adversaries. As for the West, it need not worry about India joining an anti-West bloc, given our distrust of China. But a neutral India could yet be its best bet to keep the world order stable.