Russia and India are currently in the process of negotiating a Free Trade Agreement (FTA) to increase trading integration between the two countries. The deal is in an advanced agreement stage, according to India’s Foreign Minister Subrahmanyam Jaishankar, and may secure bilateral investments between the two countries.
The cooperation between Russia and India, which has thrived after the establishment of Western sanctions on Russia, has not been affected by the Russia-Ukraine conflict because India has not condemned Putin’s actions, maintaining public neutrality on the issue.
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The two countries have thrived since the trade sanctions, which were enacted after the Ukrainian conflict erupted, as India is taking advantage of discounted Russian crude. Russia is now India’s top energy supplier and would seek to substitute throttled import products with those from India. Russia is now seeking to find a niche in the products which India can replace, as well as civilian projects that require wide cooperation.
India has also been working to bring equilibrium to the trade balance and is interested in exporting a list of products that would be competitive in Russian markets. Completing an FTA between the two countries would simplify the introduction of foreign products in both markets, depending on the final determination of such an agreement.
Russia is also finalizing another bilateral trade agreement with Iran, a country that has been facing a wide package of US-based sanctions, to increase integration and trade levels without being limited by foreign determinations.
The danger of overusing the US dollar as a weapon for establishing sanctions was recently acknowledged by US Treasury Secretary Janet Yellen, who stated that countries facing these sanctions would be determined to find alternatives.
In November, reports emerged stating that Russia was seeking to acquire parts for cars, aircraft, and trains from India and other countries to substitute for sanctioned, affected imports. This is evidence of Russia’s desire to try and ensure business continuity following trade sanctions being enforced. India, on the other hand, has an opportunity to export to Russia with fewer restrictions and increase exports in the long term.
Russia and India are expected to continue exploring opportunities for partnership and cooperation in the coming years, with trade being a significant area of focus. The FTA currently being negotiated between the two countries could potentially increase the bilateral investments and simplify the introduction of foreign products in both markets.
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