India and China have become the main markets for Russian raw materials subject to Western restrictions on the invasion of Ukraine. As Russian Deputy Prime Minister Alexander Novak said at the end of December, almost all Russian oil exports (90%) were directed to these countries, which allowed Moscow to preserve funds for war operations.
Let us remind you that Vladimir Putin, who lost the European market, offered oil discounts to “friendly countries”. According to Anisree Suresh, a researcher at the Center for Public Policy Research in India, India purchased the raw material at a discount of $20 to $35. per barrel. Thanks to this, the country was able to save almost 3.6 billion dollars. – reports Politico.
As we wrote in money.pl, the import of cheap raw materials allowed India not only to cover the needs of its own economy. Process and sell worldwide, including Europe. According to the data of the research company Kpler, during 2023, India bought more than half a billion barrels, which is ten times more than before the Russian invasion of Ukraine.
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India is pushing Russia to the wall
That all changed late last year, when India significantly restricted imports of Putin's “bloody oil.” Delivery from Russia arrived in December The lowest level in 11 months, fell 16-22 percent. – reports the Reuters agency.
Russian media claimed that this was the result of problems with payments in rupees. However, this information was denied by Indian Oil Minister Hardeep Singh Puri. – There is no problem with payments. It is about the price at which our refineries will purchase crude oil – said Puri, quoting India's “The Economic Times”.
As he emphasized, “If the Russians don't offer us a good discount, why should we buy from them?” “The Economic Times” cites government data, according to which Russian oil imports in November 2023 were the most expensive in a year. Indian refiners paid an average of $85.90. per barrel.
The Indian minister emphasized that there is plenty of oil on the world markets and there will be no restrictions on supply. Already in December, his country increased imports from Saudi Arabia and Iraq.
Russia needs oil income. However, Brent crude oil should be at least 80 USD. barrel so that the Kremlin could finance the war. When Moscow needs more money for the budget, Delhi increases the pressure. India looks at it through the prism of self-interest. Knowing that they are an important partner for Russia, they set strict conditions – says Agnieszka Legutska, an analyst at the Polish Institute of International Relations, in an interview with Fuli.pl.
So India is pushing Russia to the wall. Putin will have to make concessions if he still wants to keep his biggest client.
– India is still relatively the richest country, so The opportunity to buy cheap oil from Russia was very attractive to them. GDP per capita in purchasing power parity is 2.5 times lower than in China and 6 times lower than in Poland – explains Adam Juszczak from the Polish Economic Institute.
However, he recalls that India is a country highly dependent on fossil fuel imports, on which its energy mix is largely based.
Notably, while India's actual oil imports from Russia fell from more than 2 million barrels per day in July to 1.5 million barrels per day in December this year, it is still much higher than imports in December 2022 (991,000). Trade exchange between India and Russia has increased from about US$ 10 billion. In 2021, it will be almost 50 billion US dollars, most of which is crude oil. However, India's contacts with Saudi Arabia are not new. In 2021, India's crude oil imports from Saudi Arabia totaled $15 billion. – says Yuschak.
There will be no division
Agnieszka Legutska adds that while India is taking advantage of the situation, it is not against Russia.
– India looks at it through the prism of self-interest. They balance between the West and Russia. Due to their position in the Global South, they are also an important partner for the US. The Americans became very active in diplomacy to counter India's rapprochement with Russia. Due to the fact that both sides strive for cooperation, Delhi benefits from this game – PISM analyst notes.
However, India and Russia have strong economic and defense ties. Moscow has been India's main arms supplier for years and currently buys about two-thirds of its military equipment from Russia, although in recent years Delhi has sought to diversify its suppliers.
The recent visit of Indian Foreign Minister Dr. Subrahmanyam Jaishankar to Moscow made it clear that Delhi intends to continue its cooperation with Moscow. Jaishankar met with Putin and Russian Foreign Minister Sergey Lavrov.
As Asian agency Nikkei reports, plans for joint production of military equipment were discussed at the meeting. – We have taken concrete steps – said Lavrov. Jaishankar emphasized that relations with Russia have served India well.
The English-language Indian newspaper “Deccan Herald” quoted Minister Jaishankar's statement, which fully reflects India's point of view. – A country that has a maximum number of friends and a minimum number of enemies is certainly a country of intellectual diplomacy. Why does a country limit its friends? – he asked.
There is another reason. – India competes with China in many issues, so for geographical reasons, cooperation with Russia seems a natural outcome. For these reasons, among others, India refuses to openly condemn Russia's attack on Ukraine – says Adam Yuszczak.
Russia was flooded with rupees. Delhi has a solution
Even if crude oil imports from Russia are limited, India plans to increase orders for other raw materials, such as Russian coking coal imports, to help steel companies – writes “The India Times”.
India consumes about 70 million tons of coking coal in steel production every year, and imports comprise 85 percent. country request. Until now, the largest supplier was Australia, but in the autumn there were serious delays in production and therefore in supply. While India also imports these raw materials from the US, Indonesia and Canada, it is also increasingly looking to Russia.
Trade with India brings tangible income to Russia. Only on oil exports, Moscow – according to estimates cited by Politico – They will receive about a billion dollars of rupees every month.
India should offer Russia a solution in the form of reinvesting this money in its economy, which Lavrov himself acknowledged. What areas are involved? This was not said. However, it is no secret that the Russians are already involved in nuclear power in India, and further cooperation will also include small reactor technology.
India already has experience with Russian technology – for example, the VVER 1000 reactor, two of which are already operational at Kudankulam and four more are under construction. The agreement signed between India and China in December provides for the further expansion of this power plant with two more units, this time based on the VVER 1200 reactor – notes the PIE expert.
India will not distance itself from Russia, but by gaining an advantage in the international arena, it will increase the pressure on Moscow by pursuing its own interests.
Przemysław Ciszak, money journalist.pl
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