India strikes a delicate balance

Rising imports of Russian energy didn’t deter India from calling for the Ukraine war to end

India’s assertion that it intends to expand economic relations with Russia, including energy purchases, should dispel any lingering doubts that pressure from Western powers will lead to a change in course by New Delhi. That assertion, made during external affairs minister S Jaishankar’s first visit to Moscow since the start of the Russian invasion of Ukraine, comes on the back of a 130% increase in India-Russia trade, which has swelled to $17 billion, largely because of the purchases of discounted crude. As the world’s third-largest consumer of energy, India will be hard-pressed to find alternative sources of reasonably priced crude amid the production cut announced by OPEC+ and the turmoil in the global markets. The Indian position on Russian energy purchases reflects the delicate balancing that New Delhi has had to resort to because of the Ukraine war. The West, especially the United States (US), has begun to grudgingly accept this reality, especially since oil and gas are exempted from American sanctions on Russia. However, the US has reiterated its position that it cannot be business as usual with Russia and countries should wean their dependence on Russian energy and military hardware in the long-term.

Still, India’s growing imports of Russian energy did not deter Dr Jaishankar from specifically reiterating India’s call for an end to the hostilities in Ukraine, something articulated by Prime Minister Narendra Modi in a meeting with Russian President Vladimir Putin during the Shanghai Cooperation Organisation summit in September, when he said this was not the era of war. India has said its position is also based on the acute pain felt by developing countries because of the spiralling costs of food and energy, a direct fallout of the conflict.

For India, the harder part will be ensuring the longterm sustainability of trade with Russia, especially in light of the growing imbalance — an issue that was highlighted by Dr Jaishankar. India-Russia trade stagnated for several decades as it was largely driven by New Delhi’s purchases of weaponry. The two sides struggled to diversify and expand economic cooperation despite forays into new areas such as Russia’s Far East. The impact of the proposed G7 cap on Russian oil prices and restrictions on insurance for energy shipping remains to be seen, and India’s increased purchases of Russian energy could even have implications for relations with suppliers such as Saudi Arabia, another key strategic ally.