Page 45 - RusRPTAug24

bne August 2024 Eastern Europe I 45
of the Russian President in Novo-Oga- ryovo. There he and Putin talked over a cup of tea and took a walk in the park "with a free agenda, one on one," the Kremlin reported.
India values its long-standing close ties that date back to Soviet times and shares Putin’s objection to the “unipolar” world dominated by the US. It sees its close ties with Russia as being in its national interests and has refused to participate in the sanction’s regime on Russia.
Trade deficit
As bne IntelliNews has reported, the partners face several practical problems, including a massive, unbalanced trade regime: India exports just under $5bn worth of goods to Russia a year, whereas currently its importing over $40bn from Russia, primarily oil. Foreign Secretary of India Vinay Kwatra confirmed that bilat- eral economic issues, namely the "trade imbalance," will also be on the agenda.
During their meeting Modi and Putin set a new goal for mutual trade to grow from circa $60bn a year now to $100bn by 2030. Previously Russia set a similar goal for trade with China to top $200bn by 2025 – a goal that was achieved in 2023. According to the Ministry of Commerce of India, in the 2023-24 financial year, bilateral trade between the countries reached a historical high of $65.7bn. But more than 90% of trade turnover is imported from Russia, pri- marily oil and petroleum products and fertilisers.
Indian Prime Minister Narendra Modi arrived in Moscow the day before (and Vladimir Putin managed to show him the stables in Novo-Ogarevo), but seri- ous negotiations will begin today. This is Modi's first trip to Moscow since 2019 and the first personal meeting of heads of state after a three-year break.
Both leaders are at the beginning of their next terms. Vladimir Putin was recently re-elected to his fifth presiden- tial term, Narendra Modi's party won the last elections in India, but lost its major- ity in parliament. However, this did not stop Modi from seeking a third term as prime minister.
The war in Ukraine has largely changed the balance of Russian-Indian relations. Moscow, having broken with the West, began to rapidly turn towards China, with which India has difficult relations. At the same time, Moscow’s leverage over New Delhi and Beijing is shrinking, since India and China have more of their own capabilities than before, and new partners have emerged that offer more than Russia.
Nevertheless, Modi decided to make his first visit to Moscow after his re-election. The reason is Moscow’s growing depen- dence on Beijing, which New Delhi is watching with alarm, writes Bloomberg.
Oil
The key issues for discussion are primar- ily economic; politically, Russia has little to offer India. According to the Ministry of Commerce of India, in the 2023-24 financial year, bilateral trade between the countries reached a historical high of $65.7bn. But more than 90% of trade turnover is imported from Russia, pri- marily oil and petroleum products and fertilisers.
Unlike China, India managed almost without Russian oil before the war, and now has become the second buyer after China, sometimes taking first place (in June - 2.13 million bpd). Russia's share in Indian oil imports exceeds 40%.
The price ceiling on Russian oil intro- duced by the G7 countries had little effect on Indian imports. The Indian Express, citing sources, writes that the restrictions "have at best had a minor
month for rubles. Previously, New Delhi had to pay Moscow in UAE dirhams and Chinese yuan, which is not in India’s national interests.
The Economic Times writes that a long- term agreement on discounted oil supplies is on the agenda of the leaders' negotiations.
Rupees
The second topic is the organisation of foreign trade settlements, an official from the Russian financial and eco- nomic bloc explained to The Bell. “You can agree on projects and investments, but how to pay?” he said.
As of 2024, accumulated Russian investments in the Indian economy
are estimated at $12bn. This figure also includes investments by Rosneft in the purchase of a 49% stake in the oil com- pany Essar Oil ($3.9bn), a joint venture for the production of BrahMos rockets, and investments by Rosatom “in nuclear power plants and other projects.”
Perhaps the amount will increase if the issue of limitedly convertible rupees stuck in India, which Russia receives
for oil sales, is resolved. This money is not as much as it seems: two Russian officials told The Bell that “the amount is definitely less than $10bn and continues to decline.”
“Russian rupees” are accumulated in India using the international settlement mechanism invented in mid-2022 by the Reserve Bank of India. It works like this: foreign banks enter into a partner-
“The war in Ukraine has largely changed the balance of Russian-Indian relations”
and short-term impact" on oil imports from Russia to India. According to the publication’s interlocutors, Indian refin- eries avoid tankers subject to “explicit Western sanctions”, but, for example, accept Sovcomflot tankers. Moreover, the Indian Reliance has just signed
a one-year contract with Rosneft to purchase at least 3mn barrels of oil per
ship agreement with an Indian bank, which opens special vostro accounts (SRVA), from which it makes transac- tions with rupees in the interests of the foreign bank. Such rupees can be used to pay for goods and services from India, but it is almost impossible to withdraw them from the country. It is clear that permission to withdraw (for example, to
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