Imports from Russia Rise 12 Times in Past Five Years

Morning Standard

1. Introduction and Context

This report by Pushpita Dey presents a data-driven evaluation of India’s trade surge with Russia, revealing an unprecedented twelvefold increase in imports — from $5.48 billion in 2020–21 to $63.81 billion in 2024–25.
The growth, primarily driven by discounted Russian crude oil and essential commodities, has tilted India’s trade balance sharply, as exports to Russia rose by only 84% during the same period.

Set against the backdrop of Western sanctions, post-Ukraine war realignments, and India’s pursuit of strategic autonomy, the article frames this phenomenon as a case study in geopolitical economics — where energy pragmatism collides with fiscal imbalance.
It reflects the tension between short-term gains (cheap imports) and long-term structural vulnerabilities (payment bottlenecks, export stagnation, and dependency risks).

2. Key Arguments Presented

a. Asymmetric Trade Growth

• Imports from Russia have increased 12 times in five years, rising to $63.81 billion (8.85% of India’s total imports).
• Exports, by contrast, reached only $4.68 billion (1.11% of total exports), widening India’s trade deficit dramatically.
• This imbalance reveals an import-led relationship, heavily skewed towards energy and raw materials.

b. Composition of Trade

• Crude oil remains the primary import, surging 27-fold since FY 2020–21 due to discounted prices post-Western sanctions.
• Other imports include fertilizers, coal, minerals, and edible oils, strengthening India’s resource security.
• On the export side, India’s trade basket remains narrow and low-value, consisting mainly of pharmaceuticals, tea, coffee, and machinery, constrained by non-tariff barriers and certification norms in Russia.

c. Constraints on Indian Exporters

• Persistent obstacles include:
• Stringent Russian labeling and quality compliance rules.
• Payment complications due to Western banking sanctions.
• Limited consumer appetite for Indian FMCG and textile goods.
• As a result, Indian exporters face difficulty in converting bilateral goodwill into commercial opportunity.

d. The Payment Bottleneck

• The exclusion of Russian banks from SWIFT has disrupted standard trade settlement.
• Efforts to implement rupee–rouble or dirham-based alternatives remain constrained by Indian banks’ fear of secondary sanctions.
• This fragile payment architecture undermines the sustainability of Indo-Russian trade growth, despite strong policy intent.

e. Strategic Perspective

• The import surge represents strategic pragmatism: India capitalized on discounted Russian crude during a global energy crisis.
• Yet, the report warns that overdependence on a single supplier or commodity — particularly in volatile geopolitical conditions — could threaten India’s long-term trade resilience and fiscal balance.

3. Author’s Stance

Pushpita Dey adopts a neutral but cautiously critical stance.
While acknowledging the immediate economic logic behind increased Russian imports, she highlights the structural risks — notably, the widening trade deficit, stagnant exports, and fragile payment systems.

Her tone is analytical rather than ideological, guided by empirical data and policy realism.
She presents India’s energy pragmatism as necessary but not sufficient, emphasizing that sustainability lies in diversification, innovation, and institutional reform.

4. Biases Present

• Data-selection bias: The article emphasizes the import boom without situating it within India’s broader Eurasian trade diversification strategies.
• Geopolitical omission bias: Underplays India’s strategic balancing between the U.S.-led sanctions bloc and Russia’s regional trade pivot.
• Economic reductionism: Treats trade as a purely economic issue, leaving aside its strategic, diplomatic, and climate dimensions.
• Short-termism: Focuses on a five-year window without tracing historical continuity or projecting future trade evolution.

5. Pros and Cons

 Pros

• Empirical clarity: Uses official trade data to support every major claim.
• Relevance: Captures a key geopolitical-economic development amid shifting global energy politics.
• Objectivity: Maintains a data-first, policy-neutral tone.
• Identification of barriers: Highlights real regulatory and financial impediments that policymakers can address.

 Cons

• Lacks depth in solutions: Identifies challenges but doesn’t propose sector-specific export revival strategies.
• Geopolitical under-analysis: Does not engage deeply with sanctions diplomacy or BRICS-level coordination mechanisms.
• Sectoral generalization: Treats “exports” as a monolith without disaggregating high-potential sectors.
• Absence of predictive outlook: Stops short of forecasting trade sustainability or diversification pathways.

6. Policy and Governance Implications

a. Trade Diversification Strategy

• Broaden India’s export base to include IT services, renewable technologies, pharmaceuticals, and engineering goods.
• Develop India–Russia joint certification frameworks to reduce compliance barriers.
• Create sector-specific trade missions targeting Russia’s import gaps (healthcare, agri-tech, and chemicals).

b. Payment System Reform

• Accelerate development of sovereign cross-border settlement systems, such as a Rupee–BRICS digital clearing union.
• Encourage adoption of blockchain and fintech platforms to bypass SWIFT bottlenecks safely.

c. Energy Security Planning

• Reduce overdependence on Russian crude by diversifying to African and Latin American suppliers.
• Strengthen domestic refining and strategic reserves to cushion against supply volatility.

d. Export Promotion Policy

• Incentivize MSME exporters through credit lines, logistics support, and trade fairs.
• Expand market access diplomacy via bilateral economic commissions and industry partnerships.

e. Geopolitical Balancing

• Maintain strategic autonomy: engage Russia economically without alienating Western trade blocs.
• Use BRICS, SCO, and G20 platforms to advocate a multipolar trade finance architecture.

7. Real-World Impact

Economic Impact

• Short-term gain: Discounted oil improves fiscal stability and inflation control.
• Long-term risk: Persistent trade deficit and dependence on one partner could erode India’s external balance.

Strategic Impact

• Deepens India–Russia energy partnership, ensuring energy security amid global supply shocks.
• However, creates vulnerability to sanctions escalation and global market disruptions.

Institutional Impact

• Exposes the need for financial sovereignty — self-reliant payment systems and regional settlement frameworks for the Global South.

Social Impact

• While cheaper energy benefits Indian consumers indirectly, stagnant exports limit domestic job creation and manufacturing growth.

8. Alignment with UPSC GS Papers

9. Conclusion

The report encapsulates India’s strategic-economic paradox:
 Immediate benefit from cheap Russian oil, but
 Long-term imbalance in trade structure and strategic dependence.

India’s economic pragmatism amid geopolitical turbulence has delivered short-term stability — yet it exposes vulnerabilities in export competitiveness, payment reliability, and fiscal sustainability.
To transform this tactical success into strategic strength, India must:

1. Diversify export sectors,
2. Reform financial architecture, and
3. Leverage multilateral diplomacy for equitable trade frameworks.

In essence, India’s Russia trade boom must evolve from energy opportunism into strategic economic sovereignty.

10. Future Perspectives

1. Digital Trade Settlement:
   Launch a BRICS+ AI-integrated payment network enabling rupee–ruble and local currency settlements.
2. Sectoral Export Missions:
   Establish India–Russia Pharma and IT Corridors, supported by export insurance and logistics hubs.
3. Energy Hedging:
   Use sovereign wealth reserves and long-term contracts to manage oil price volatility.
4. Mutual Certification Framework:
   Create joint India–Russia quality assurance bodies to simplify product approval.
5. Strategic Economic Diplomacy:
   Use India’s leadership in G20 and BRICS to promote multipolar trade normalization post-sanctions and safeguard developing economies.