New Delhi, October 26
External Affairs Minister S Jaishankar’s reported plans to visit Moscow next month would come at a critical time in India’s ties with Russia. The indefinite prolongation of the conflict in Ukraine leading to high energy and food prices and the screws being tightened by the western countries on trade with Russia are two concern points that have arisen recently.
The current India-Russia trade story is buoyant. In the first five months of the current fiscal, trade with Russia was at a record $ 18 billion. This has given rise to expectations that the Putin-Modi target of $ 40 billion in trade by 2025 would be accomplished within this fiscal itself. To put it in perspective, trade with Russia has broken the $ 10 billion level only twice in the past decade.
But there are storm clouds as the conflict prolongs with no end in sight. The Union Finance Ministry will have to make a large provision in the supplementary demands for grants to cover up for the rise in fertiliser prices. But the biggest worry is on the energy front because of the West’s plans to begin price capping on Russian oil from December 5. On surface it will suit India to buy Russian oil under western supervision at say $ 60 a barrel. But that would mean siding with the G7 and opposing Russia, something that India has avoided so far.
Another worry is the inability of the rupee-rouble trade to take off. Large Indian banks are understood to have not responded warmly to proposal from Russian counterparts to set up rupee trade settlements for fear of western sanctions. Their lack of enthusiasm is also because of difficulties in determining an accurate rouble-rupee exchange rate. Russian banks too need to work out what will they do with a pool of rupees sitting in their accounts in India.
Jaishankar and Russian Foreign Minister Sergey Lavrov have already met four times this year. At their last meeting in New York last month, Jaishankar had described Russia as a “major partner in many areas” and said his discussions with Lavrov had focused on bilateral cooperation, other issues and the G20.