Indian Prime Minister Narendra Modi won a major victory on his state scale in Russia earlier this month, but his Moscow counterpart Vladimir Putin failed to secure cooperation in a key area of concern.
India exerts its influence over heavily sanctioned Russia as a major customer of its oil, and New Delhi is “walking a tightrope,” one analyst told Newsweek.
India’s growing oil purchases have been a boon for the Russian economy amid Moscow’s isolation following its invasion of Ukraine. Trade as a whole is also booming, with India’s Commerce Ministry reporting a record bilateral turnover of $65. 7 billion last year.
Talks between Putin and Modi have failed to unlock billions of dollars in oil profits held in Indian banks. With Russia’s use of the US dollar in industry limited in the wake of the 2022 invasion, Moscow has attempted to circumvent foreign sanctions by allowing countries like India to pay for their oil in their local currency.
However, this has led to a buildup of rupees of up to $1 billion each month in Indian banks. The Reserve Bank of India’s restrictions thwarted efforts by Russian companies to repatriate the budget to Russian accounts, converting them into rubles.
According to Indian media, Russia still had no option to invest the stranded oil profits in Indian stocks, securities, and infrastructure projects. Newsweek has reached out to Russia’s Ministry of External Affairs and India’s Ministry of External Affairs via a written request for comment.
Russia exports oil at preferential costs to India, a “friendly” country that has maintained its sanctions and its official denunciation of the war in Ukraine. Last month, India became the second-largest customer of Russian fossil fuels after China.
Russia is also the source of about 40% of India’s crude oil imports, up from 30% in March. Last year, New Delhi was the largest importer of Russian maritime crude thanks to its discounted barrels.
Despite the rupee dilemma, Moscow has presented strong diplomacy to New Delhi, especially in its bid to gain a permanent seat on the United Nations Security Council. Since the creation of the UN in 1945, only five permanent members have had the right of veto: China. , United States, United Kingdom, USSR/Russia and France.
Adding permanent seats, which have veto power in the body, would require an amendment to the UN Charter by a two-thirds majority vote in the UN General Assembly. “The procedure is complicated and the discussion about expanding the number of permanent members has been going on for a long time. However, our support for India’s candidacy, as well as that of Brazil and the African group, remains unwavering,” Russian Foreign Minister Sergei Lavrov said at a press conference this month.
Meanwhile, there is no indication that Modi has agreed to take over Russia’s arms orders. Russia has for decades been the arms supplier to India, the world’s largest arms buyer, and accounted for 36% of India’s defence imports between 2019 and 2023.
Unconfirmed reports have revealed that the South Asian country has started using obsolete Russian-made tanks, warships, helicopters and artillery units. India has also reportedly suspended giant orders for complex Russian military aircraft and gadgets.
The reports focus on Indian court cases from earlier this year in which Russia missed delivery deadlines for its S400 air defense cellular platform.
“This oil saga shows that the balance of forces has shifted between Russia and India. New Delhi has the advantage lately and can, to some extent, set the terms of contracts like this, in which Russia is willing to sell a product and India is interested in selling a product. Able and willing to buy it,” Ian Hall, a professor of foreign affairs at Australia’s Griffith University, told Newsweek.
Still, dangers remain for India, he added. Moscow is content to be paid in hard-to-use rupees, but also not to reinvest them in India, as New Delhi suggests. “
Hall that India still has a high demand for Russian arms sales, especially when it comes to its air defense system, which is delayed. “So India is walking a tightrope, both with Russia and with the West. “
During his visit, the prime minister criticized Russia’s continuation of the war, telling Putin that “a solution cannot be found on the battlefield. ” He called the death of young people after a deadly attack at a Ukrainian youth hospital on July 8 “unbearable. ” .
Modi also pressed Putin to send back Indians forced to fight alongside Russian troops opposed to Ukrainian forces. Indian news firm NDTV reported that Modi had obtained a concession, and Russia agreed to send Indian infantrymen from its army and they return home.
Dozens of Indians were reportedly lured to Russia through agents who promised them well-paying jobs to force them to do military service. Putin’s spokesman declined to comment on the deal.
Rajan Menon, the Anne and Bernard Spitzer Distinguished Professor of Political Science at the City College of New York, told Newsweek that India and Russia are rooted in a “cold pragmatism. “
“Politically, Moscow has been present in India since the mid-1950s. On the military front, Russia remains by far India’s largest arms supplier, although it is now facing an unprecedented festival from other countries,” he said.
With China being India’s main adversary, New Delhi would have “little to gain” strategically and “much to lose” by avoiding Russia, while the Kremlin maintains close ties with Beijing, Menon added. “Taken together, those considerations explain why India has not joined the West in condemning Russia’s invasion of Ukraine, let alone imposing sanctions. “
Micah McCartney is a Newsweek reporter based in Taipei, Taiwan. It covers United States-China relations, security issues in East and Southeast Asia, and China-Taiwan relations.
You can contact Micah by emailing m. mccartney@newsweek. com.
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