Putin’s Delhi Test: Can India-Russia Trade Move Beyond Oil And Weapons?

Russian President Vladimir Putin’s visit to New Delhi came at a moment when the India-Russia relationship remains strategically strong but economically lopsided. The two countries continue to rely heavily on Russia for energy and defence supplies, but the bigger question emerging from Putin’s meeting with Prime Minister Narendra Modi on Friday is whether that relationship can be broadened into a more balanced economic partnership.

At their bilateral meeting on the sidelines of the BRICS Summit, PM Modi and Putin reviewed cooperation across political, economic, defence, energy, space, skills and people-to-people ties. The two leaders also specifically welcomed INNOPROM India, the Russian industrial exhibition held in India for the first time from

September 9 to 11 and underlined its importance in expanding trade and industrial ties.

That emphasis on industrial cooperation matters because India-Russia trade has grown rapidly in recent years, but much of that expansion has been driven by Indian imports of Russian energy. The challenge for New Delhi is to find more products and sectors in which Russia buys from India and to persuade Russian companies to manufacture in India rather than simply sell into the Indian market.

ITPO Chairman Javed Ashraf, speaking during CNN-News18 BRICS Dialogues, put the problem rather bluntly: Russia remains a major strategic partner for India, but the economic relationship needs greater balance.

Trade real test of Putin’s Delhi visit?

India, he said, has identified products that it can export in larger quantities to Russia, while there is also an opportunity for Russian companies with strong technological capabilities to manufacture in India. That could allow Russian firms to tap India’s skills and market while reducing their dependence on China for certain imports.

The numbers underline the challenge.

India and Russia are targeting $100 billion in bilateral trade, but the existing trade basket is heavily skewed towards Russian exports to India. In the CNN-News18 discussion, the imbalance was highlighted as a central question around the target: simply reaching $100 billion by importing more energy would not amount to the kind of economic diversification India is seeking.

That is where INNOPROM became more than a ceremonial exhibition.

The industrial showcase, held in New Delhi from September 9-11, provided a window into the kind of relationship India wants to build with Russia: one involving manufacturing, technology and industrial partnerships rather than a relationship centred principally on commodities and defence equipment.

Aviation JVs Paving The Way?

The same question is visible in aviation.

Civil Aviation Minister Ram Mohan Kinjarappu, speaking on CNN-News18 BRICS Dialogues with journalist Shawan Sen, said India aims to make its first civilian aircraft by 2028 and that Russia is also interested in manufacturing aircraft in India. He pointed to plans for a joint venture involving the Sukhoi Superjet and said India wants technology transfer through such partnerships.

That is precisely the sort of shift that could give the India-Russia relationship a new economic dimension: Russian technology and industrial capabilities being combined with Indian manufacturing capacity, skills and market access.

The nuclear relationship offers another example of a partnership that could move beyond the traditional oil-and-defence framework.

India and Russia already have a long-standing civil nuclear relationship, and Ashraf noted during the CNN-News18 discussion that Russia remains the only one of the three countries with which India had originally envisaged civil nuclear cooperation after the NSG exemption to have made substantial progress with India. He said the two sides were looking at further cooperation, including support across the nuclear fuel cycle.

The Modi-Putin meeting itself also listed energy and space among the areas reviewed by the two leaders, while the two sides agreed to remain engaged to further strengthen their “Special and Privileged Strategic Partnership”.

But if nuclear, space and aviation provide the technological possibilities, trade remains the hard test.

Sputnik News’ Evgenii Pavlov, speaking to Shubhangi Sharma of CNN-News18 Special Projects during CNN-News18 BRICS Dialogues, said the India-Russia trade deficit is being addressed. He pointed to the potential for Indian exports to the Russian market and argued that India needs to produce goods that Russia actually needs.

That is an important distinction. The problem is not simply whether India can export more. It is whether the two economies can build a trade relationship in which Russia becomes a significantly larger market for Indian goods.

There are signs that both sides recognise this.

Rupee-Rouble Mechanism

India and Russia are also looking at greater manufacturing cooperation and joint ventures, while discussions around expanding bilateral trade include the possibility of an eventual free-trade agreement with the Eurasian Economic Union. Ashraf said such an agreement would potentially give Indian companies access not merely to Russia but to a wider Eurasian market.

There is also a financial dimension to this push.

Bloomberg has reported that Russia’s Sberbank is working with the Reserve Bank of India on a mechanism for using digital currencies for bilateral trade settlements. If developed, such mechanisms could make cross-border payments faster and more efficient, particularly at a time when both countries have had to navigate a complicated international payments environment.

So, the emerging India-Russia economic agenda is considerably broader than oil.

It includes industrial manufacturing, technology transfer, civil nuclear cooperation, aviation, space, trade diversification, financial mechanisms and access to new markets.

But there is still a fundamental problem: Russia needs to buy more from India.