Why India Can't Afford to Jettison Its Relationship With Russia

Hindustan Times

2 days ago

President Trump is using the threat of stiff tariffs to try to peel India away from Russia, as he attempts to boost pressure on Russian President Vladimir Putin to end the war in Ukraine. President Trump has been trying to persuade Indian Prime Minister Narendra Modi to help the U.S. isolate Russia.
But decades of close economic, political and military relations between New Delhi and Moscow mean Trump faces a challenge in persuading Indian Prime Minister Narendra Modi to drop a partnership that has survived great geopolitical turmoil.
In recent days, Trump has blasted India for its heavy reliance on Russian oil imports, as well as its longstanding purchases of Russian military equipment. On Wednesday, the president slapped India with an additional tariff of 25% on its exports to the U.S.—doubling the existing 25% duty that went into effect earlier this month—as punishment for its continued purchasing of Russian oil.
Despite tariffs that could inflict real damage on the Indian economy, Modi has stood firm in the face of rising American pressure—a sign of how important relations with Russia are for the South Asian giant.
India's foreign ministry called the penalty 'unfair, unjustified and unreasonable' and promised that India will 'take all actions necessary to protect its national interest.' Kremlin spokesman Dmitry Peskov said earlier in the week that 'sovereign countries should have and do have the right to choose their own trading partners.'
On Friday, Modi wrote on X that he had a 'good and detailed conversation with my friend President Putin.'
'I thanked him for sharing the latest developments on Ukraine,' the prime minister wrote, adding that the leaders had 'reaffirmed our commitment to further deepen the India-Russia Special and Privileged Strategic Partnership.' He said he expected Putin to visit India later this year.
Since the Cold War, Russia has been one of India's most constant partners in a relationship anchored by arms deals, economic cooperation and diplomatic support for New Delhi as it faces off with regional rivals China and Pakistan. For its part, Moscow drew close to India after tensions grew in the 1960s between the Soviet Union and Beijing.
In the decades that followed, Russia extended more than a billion dollars' worth of loans for the purchase of Russian military and nonmilitary goods.
The charm offensive was further sweetened by Russian crude, which Moscow sold to New Delhi in the 1960s at a 10% to 20% discount to prevailing world prices.
India's oil refiners have made significant savings by buying discounted Russian crude in recent years.
'This was all part of the Soviet 'oil offensive,'' said historian Sergey Radchenko, Cold War expert and professor at Johns Hopkins School of Advanced International Studies.
Moscow even sent geologists to India to search for oil and, when little was found, the Soviet Union allowed India to purchase Siberian crude with shipments of tea so that New Delhi could conserve its cash reserves, he said.
The bonds grew closer after the U.S. backed Pakistan—a bitter rival of India—and imposed a slew of sanctions on New Delhi in 1974 after its first nuclear test and in 1998 when India again tested its nuclear weapons.
'Many Indians still find Russia today, because of the history, a reliable partner,' said Harsh V. Pant, head of strategic studies at the Observer Research Foundation, a think tank in New Delhi. 'Many in India believe that America has always been more favorably disposed towards Pakistan.'
Even Russia's invasion of Ukraine hasn't pushed Modi to repudiate Moscow. India—which has long pursued a strategy of avoiding alignments with other major powers—has stayed neutral on the Ukraine war, abstaining from United Nations votes to condemn the invasion and declining to join successive waves of Western sanctions.
Meanwhile, India—a net energy importer with a voracious and growing appetite for energy—benefited from a shift by Western countries away from Russian oil, as well as a price cap that the U.S. and its allies have imposed on the country's crude.
Sanctions targeting Russia's oil industry have increased Moscow's reliance on friendly nations such as India.
Over the past several years, India has begun buying massive amounts of Russian oil. Last year, India accounted for more than one-third of Russia's oil exports, second only to China at nearly 50%, according to the Observer Research Foundation. Steep discounts have saved Indian refineries $17 billion over the past three years, according to credit-rating firm ICRA.
Indeed, India isn't the only Asian country to benefit from Russia's increasing economic isolation. Rival China has likewise bought crude and scooped up assets inside Russia. But a creeping wariness in Moscow of overdependence on Beijing makes Russia's relationship with India all the more important.
The cheap oil is critical for a country of 1.4 billion that is growing rapidly. The South Asian nation is the world's fastest-growing consumer of oil, behind only the U.S. and China in total consumption, according to the U.S. Energy Information Administration. Its vast energy needs are met by importing 90% of its crude oil from overseas.
Over the past three years, trade between the two countries skyrocketed to $69 billion, a record figure pushed higher by India's purchases of Russian crude. Those imports have allowed New Delhi to sell gasoline at a cheaper rate domestically and resell its oil products abroad at a fatter margin.
'It's not going to be shutting off the Russian tap in the immediate future,' said Syed Akbaruddin, former Indian permanent representative to the U.N. and dean of the Kautilya School of Public Policy in Hyderabad. 'There is no way, given the cost differential and the impact on the budget.'
To be sure, Indian refineries have already started hedging their bets by curbing their purchases in recent weeks, according to data and analytics firm Kpler. Imports of Russian crude oil fell about 500,000 barrels a day in July to a five-month low of 1.6 million.
According to the company's analysis, India's private refiners, which process over 50% of imported Russian crude, are expected to boost their imports from other sources including the Middle East and West Africa—but can't cut off Russian oil completely.
'Replacing Russian barrels is no easy feat—logistically daunting, economically painful and geopolitically fraught,' Sumit Ritolia, Kpler's lead research analyst in refining and modeling, wrote in a research note.
Meanwhile, Trump has also taken aim at India's historic reliance on Russia for military equipment.
The S-400 air-defense system, seen at a Moscow parade in May, has been a key part of Russia's arms sales to India.
Although New Delhi has been trying to diversify its suppliers in recent decades, Russian and Soviet-made equipment still makes up over 50% of India's arsenal. New Delhi continues to be a loyal customer of Russian arms.
Part of the appeal is Moscow's willingness to share technology and help India manufacture arms domestically. In contrast, under former President Joe Biden, the U.S. signaled its openness to technology transfers, but Washington has dragged its feet on some projects.
Last month, the Indian navy commissioned a new stealth frigate purchased from Russia. Two more frigates are being built in India with technical assistance from Russia's Yantar shipyards.
In 2018, during Trump's first term, India bucked threats of sanctions from the U.S. to agree to buy five squadrons of Russia's top shelf S-400 air-defense system. Three of those squadrons so far have been delivered—and stationed along India's borders with China and Pakistan.
'It will be many decades before India can actually replace the Russian kit in their inventory, if they can replace it at all,' said Ashley J. Tellis, an expert on geopolitics at the Carnegie Endowment for International Peace.
Write to Shan Li at [e-mail] and Thomas Grove at [e-mail]
Why India Can't Afford to Jettison Its Relationship With Russia
Why India Can't Afford to Jettison Its Relationship With Russia