NEW DELHI: India and Russia are contemplating a free trade deal (FTA), the Russian trade minister announced on Monday, potentially deepening bilateral commercial ties that have grown since Ukraine’s crisis broke out.
Despite Western requests for India to gradually distance itself from its key arms supplier, Russia, since its February 2022 invasion of Ukraine, the FTA discussions indicate a step increase in economic relations between the two countries.
Over the past fiscal year, India’s imports from Russia more than doubled to $46.33 billion, primarily through oil.
“We pay special attention to issues of mutual access of production to the markets of our countries,” Russian Deputy Prime Minister and Trade Minister Denis Manturov said.
“We look forward to intensifying negotiations on a free trade agreement with India with the Eurasian Economic Commission.”
The COVID virus, according to Indian Foreign Minister S. Jaishankar, has stymied talks on an FTA between India and the Russian-led Eurasian Economic Union, and he hopes “our colleagues will pick up on this… because we do believe it will make a real difference to our trade relationship.”
Road building materials and equipment, as well as chemicals and medicinal products, are in high demand in Russia, according to Manturov, and “I am confident that this will create opportunities for Indian companies to increase their supplies to Russia.”
The declaration comes at a time when New Delhi is also negotiating free trade agreements with the United Kingdom, the European Union, and the Gulf Cooperation Council.
According to Reuters, Russia may seek to import more than 500 products from India for key sectors such as cars, aircraft, and trains, given that Western sanctions imposed in response to Russia’s military action in Ukraine have hampered Russia’s ability to keep core industries operational.
Manturov also stated that Russia will think about expanding the usage of “national currencies and currencies of friendly countries.” India has expressed a desire to increase the usage of its rupee currency in commerce with Russia.
Russia refers to its campaign in Ukraine as a “special military operation” to counter security threats, while pro-Western Ukraine refers to it as an unjustified war of conquest.
New Delhi has not directly condemned the Russian intervention, instead urging a peaceful resolution of the situation through discussion. Bilateral trade between Russia and India has increased as the war has proceeded.
Russia, long India’s largest supplier of military gear, surpassed Iraq last month to become India’s top crude oil supplier. Prior to the outbreak of the war in February of last year, India purchased very little oil from Russia.
Russia’s efforts to improve trade with India are part of its strategy to mitigate the impact of Western sanctions by increasing trade with Asian behemoths such as China.
Moscow is also attempting to expand or preserve cooperation with other South Asian countries, most recently agreeing to collect payments for the construction of a nuclear power project in Bangladesh in yuan and considering discounted oil shipments to Pakistan.
According to Jaishankar, Indian businesses might benefit from Russian technology, and New Delhi is striving to resolve payment, certification, and logistics concerns.