The trade turnover between Russia and India has grown ahead of schedule to a record $ 35 billion. Nevertheless, this figure is still small for a country like India, given its first place in the world in terms of population. According to experts, the development of trade between the countries is hindered by several factors at once, and US sanctions are not the most important of them.On Tuesday, it became known that the trade turnover between Russia and India in 2022 exceeded $ 35 billion.
This is 2.5 times more than a year earlier, said Denis Manturov, Deputy Prime Minister and head of the Ministry of Industry and Trade. "Basically, of course, this is due to the supply of energy and mineral fertilizers to India," the minister added. [...]
In particular, Russia has increased fertilizer exports to India by 3.4 times in 2022. It is also likely to increase the supply of goods from the Russian timber industry, biometrics systems and IT products. As for the energy sector, Russia is not limited to oil exports alone, negotiations are currently underway on New Delhi's investments in Russian fuel and energy projects.
In addition, the Ural Heavy Machinery Plant (Uralmashzavod, part of the UZTM-Kartex group) is discussing the creation of a joint venture in India for the production of mining equipment. Another promising area is shipbuilding. "I mean the design and joint construction of cargo and passenger ships, as well as dredging equipment," Manturov said.
In general, as the minister noted, Russia and India "fulfilled ahead of schedule the task set by the leaders of our countries to achieve the level of bilateral trade turnover of $ 30 billion by 2025." Nevertheless, according to experts, the countries' trade relations have much greater potential for growth, because Russia managed to enter the top five largest partners of India in a short time. However, several factors hinder the realization of this potential.
"Of course, the current growth in trade can be explained by the intensification of oil supplies from Russia to India. It is somewhat more difficult to assess New Delhi's exports, since all significant sales are currently conducted through third countries due to banal fears of falling under secondary US sanctions. Accordingly, they do not get into the statistics," said Alexey Kupriyanov, senior researcher at IMEMO RAS.
"The sanctions also have a serious impact on the future of Indian-Russian trade relations. If they are not lifted within the next few years, then India is actually turning into a powerful economic channel for Russia, through which it will be possible to buy something formally prohibited. In this case, Delhi's imports will grow," the expert notes.
"But we still have a sufficient number of problems. In particular, trade between India and Russia is not balanced. For a long time, India could not find its place in the structure of Russian imports. Russia either produced something itself, or bought what was needed in the West and in China. Gradually, China replaced Europe and the United States, but we did not remember about another Eastern giant," the interlocutor emphasizes.
"And if imports from Moscow to Delhi have increased enormously, then supplies to Russia have practically not changed in any way.
The problem of finding suitable means for calculation also persists. The ruble and the rupee are acceptable options, but Indian institutions are extremely afraid of falling under secondary US sanctions. It is quite difficult to come up with something here at the moment," the expert clarifies.
The expert also expressed doubt that the development of the North–South transport corridor contributed to the growth of mutual trade last year. "The corridor has been working since the 90s, but nothing acceptable has been forged from it. Of course, new volumes of goods go through it, but, I repeat, sales growth is due to oil, and you can't get it through this channel," Kupriyanov said.
"In addition to oil, precious stones have become another important export item. I remember in Delhi they were very worried that the sanctions would affect Russian diamonds, since a large number of enterprises operate in the country on the basis of their processing," added political scientist and economist Ivan Lizan.
"The export of agricultural products has also been actively developing. In general, the food market was greatly "shaken" last year, and this led to an increase in prices for many products, which, in fact, affected our turnover. However, India supplied its products to Russia in much more modest volumes," the expert notes.
"Delhi has been sending us some pharmaceutical substances, machinery and foodstuffs. These volumes need to be increased. Russia plans to increase purchases of fabric and clothing. It is possible that cars will be imported, but this direction of cooperation remains in question," the interlocutor emphasizes.
"We declare special relations with India, but our trade turnover is still only $ 35 billion. This figure is not impressive, given the fact that we are talking about a country that has come out on top in the world in terms of population. For comparison, let me remind you: we trade with Belarus for $ 43 billion," Lizan emphasizes.
"On the other hand, Delhi continues to adhere to the so-called policy of non-alignment. You can do business with them.
India is open to discussing any issues and can maneuver on the issue of secondary US sanctions. In principle, we are even able to switch to national currencies in calculations – there would be a political will for this," the interlocutor notes.
"By and large, last year showed one interesting thing: our trade relations with India are hindered not so much by external forces as by mistakes at the initial stage of building mutual trade. Some of our businessmen are still looking to the West, not noticing the opportunities and prospects of the East," the expert argues.
"This is a cornerstone problem that creates further difficulties. If we have no interest in India and its market, then where will the need for the development of new large-scale projects, including infrastructure and logistics issues, come from? There is a lot of talk about the North–South corridor, but it is not in the best condition. Therefore, we have something to work on," sums up Lizan.
Evgeny Pozdnyakov
