Russia’s Shift to Asia
In 2022, Russia moved away from European economic ties and focused on strengthening relations with Asian countries.
This shift was prompted by vulnerabilities in Russia’s economy tied to Western markets, which became evident after the financial crisis of 2007–08.
India-Russia Trade Growth
Rapid Growth: Trade between India and Russia surged from $3.5 billion in mid-2022 to $7.5 billion by May 2024.
During a meeting in July 2024, leaders set a goal of reaching $100 billion in trade by 2030.
Diverse Imports: India imports Russian oil, fertilizers, and sunflower oil, helping to manage food inflation and energy needs.
Challenges
Both nations pursue industrial self-sufficiency, which limits mutual economic benefits.
Existing sanctions hinder trade opportunities, particularly for small and medium enterprises.
Lack of Infrastructure: Issues like unstable payment mechanisms and insufficient logistical support complicate trade.
Limited joint investment projects outside military and nuclear sectors, with a need for more business-oriented tech collaboration.
Slow Development in Science and Education: Cooperation in these fields is lagging, which hampers mutual understanding and innovation.
The Outlook
The Ukraine crisis has driven Russia closer to India, but ongoing external pressures create uncertainty about long-term relations.
Russia’s military industry may boost exports to India, transitioning some production capabilities to civilian goods like machinery and medical equipment.
India needs to enhance the quality of its exports, focusing on engineering and tech products, rather than relying on assembly plants of foreign companies.
Increased integration in production chains and localization negotiations are essential for stable and prosperous bilateral relations.
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