Russia has turned to India for raw materials and spare parts for its industries reeling under western sanctions. But India is unable to make the most of it.
President Vladimir Putin’s government has sent India a list of more than 500 items, including spare parts for automobiles, aircraft, and trains, Reuters reported on Tuesday (Nov. 29).
Russia has become India’s fifth-largest trading partner after the Ukraine war began earlier this year, thanks to import of discounted coal and oil trade. In April-September this year, India’s bilateral trade with Russia zoomed to a record $22.6 billion.
Yet, India’s trade deficit with Russia has only swollen to $20 billion.
India and Russia have a history of strategic, military, economic, and diplomatic relationships. That’s why India has refrained from openly criticizing Russia for its aggression against Ukraine.
Putin’s regime, therefore, views India as an alternative source of resources.
With global car companies such as Ford, Mercedes-Benz, Toyota, Honda, BMW, Nissan, and Renault suspending operations in Russia, automobile parts are in high demand there. Airlines running fleets of foreign-made planes and mining companies, too, are in a soup.
Russia’s wish-list for India runs nearly 14 pages. Besides car engine parts, it includes infotainment systems, landing gear components, fuel systems, life jackets, and airplane tires, among others, Reuters reported.
It also mentions raw materials and equipment to produce paper, paper bags, consumer packaging, yarns, dyes, and more.
Russia’s desperation throws up a $10 billion potential for Indian exports over the next few months, Reuters quoted government sources. For starters, it could help reduce India’s trade deficit of $20 billion with that country.
Yet, Indian exporters are hesitant.
They fear western sanctions amid issues related to payment and insurance. Smaller firms that earlier traded with Iran despite sanctions haven’t shown enough interest either, according to Ajay Sahai, director general of the Federation of Indian Export Organizations.
The rupee trade mechanism, launched in July, has not helped much either.
“...it is critical to ensure that the West does not get upset with India’s increased economic involvement, as New Delhi cannot jeopardize its ties with the West,” Nandan Unnikrishnan, the head of Eurasian Studies at the think-tank Observer Research Foundation, told The Economic Times.