Author : Ivan Shchedrov

Expert Speak Raisina Debates
Published on Jan 14, 2025

While India remained committed to its ties with Russia in 2024, both countries need structural reforms that strengthen their partnership, especially in trade and investments

India and Russia at a crossroads

Image Source: Getty

In Russia, 2024 was perceived as one of the most eventful years in the modern history of bilateral relations. Against considerable odds, the Indian prime minister, Narendra Modi, made a double visit to Russia. His first visit was in July as a part of the agreements within the 2000 Declaration on Strategic Partnership, followed by a second one in October to participate in the 16th BRICS summit in Kazan. While repeated visits are not rare—former Prime Minister Manmohan Singh visited Russia twice in 2009 and 2013, and Narendra Modi in 2015—this time, however, this gesture holds significance. It indicates India’s commitment to secure traditional political ties and is thus considered to have more value than ever before.

Against considerable odds, the Indian prime minister, Narendra Modi, made a double visit to Russia.

From this perspective, India’s message to the international community is reminiscent of 2009, when Indian leadership participated in the BRICS meeting and the Shanghai Cooperation Organisation (SCO) summit in Ekaterinburg, Russia, for the first time, shortly after the Indo-United States (US) civil nuclear agreement was signed in 2008. By reaffirming its commitment this year, India also placed the onus on Russian leadership, with 2025 slated to be the year of a reciprocal visit from Russia's President, Vladimir Putin. Although the scope of future proposals is still unknown, the early announcements about Putin’s upcoming visit, in stark contrast to the unexpected trip of Narendra Modi, may indicate that the Russian side is preparing well in advance for the meeting.

Global aspirations as a backbone of bilateral ties 

In 2024, bilateral relations were shaped by India’s global posturing on the international stage. In other words, the country’s growing aspirations placed the global agenda above certain regional and bilateral issues. In July, during his first visit to Russia, Prime Minister Modi highlighted that India is pursuing important peacekeeping efforts aimed at resolving the Ukrainian conflict. This visit to Russia was also Modi’s first after his re-election, breaking the tradition of prioritizing countries in India’s immediate neighbourhood. The reasoning behind this decision seems to be quite obvious—relations with the Maldives had been tense, Bangladesh was grappling with an acute social and political crisis, and Sri Lanka was entering a new electoral cycle.

Additional reasoning comes from India’s participation in multilateral meetings. The invitation to visit Italy for the G7 Summit in June was perceived as being of top importance, especially since it provided ground to amplify the voice of the Global South, as well as to hold talks with the Ukrainian president. In some regards, it was placed at a higher priority than participating in summits of important regional formats, for example, the SCO Summit in Astana and the second India-Central Asia Summit, which was scheduled in 2024. Participation at the BRICS summit in Kazan in October is another great example. The decision to take part in the meeting of a non-binding organisation with global ambitions counters some observations about the limited benefits that India could get from the format. Despite some disagreements among its members and abstention from India on the issues of de-dollarisation and the extension of memberships, BRICS is still considered the only group actively pushing for a balanced approach, thanks to its focus on promoting global multipolarity.

Despite some disagreements among its members and abstention from India on the issues of de-dollarisation and the extension of memberships, BRICS is still considered the only group actively pushing for a balanced approach, thanks to its focus on promoting global multipolarity.

In bilateral and multilateral relations with Russia, India has effectively highlighted the visibility of fruitful cooperation, yet it has been cautious about making any political commitments. For Russia, this policy may be deemed sufficient today, but shortly, it will require more tangible outcomes.

Economic relations: Nuanced but paramount

In the absence of political commitments tied to financial negotiations, 2024 also gave bilateral economic relations new value, but the prospects for growth are still unknown.

During the 25th session of the India-Russia Inter-Governmental Commission for Trade, Economic, Scientific and Cultural Cooperation (IRIGEC-TEC), the volume of bilateral trade was said to have reached US$66 billion, indicating positive growth. Russia has reached the fourth position among India’s trade partners and is the second-largest exporter to India after China.

However, challenges become evident when we examine these numbers more closely. Although in January-August 2024, trade broke records, the volume of Russian exports has approached its local maximum. During this period, it constituted US $43.4 billion (mainly energy resource exports)—a modest increase of 5 percent compared to the previous period. As a result, the next stage of trade and economic cooperation will hinge on Russia’s ability to diversify its export basket and expand India’s export base. In the mid-term, Russia’s key objective is to curb its inflation rate, eliminate the socio-economic disbalances caused by an overheated military-industrial complex, and ultimately facilitate a seamless transition from military to civilian production. For India, it will be necessary to resolve infrastructure and socio-economic problems to maintain its attractiveness to foreign investors and increase production and overall gross domestic product (GDP) growth.

The next stage of trade and economic cooperation will hinge on Russia’s ability to diversify its export basket and expand India’s export base.

Chronic disbalances remained a key problem in bilateral trade—India's imports from Russia were 12 times greater than its exports to the country between January and August.

The two countries acknowledged the importance of promoting export in India through increased investments in export-oriented production.

This measure is also highly necessary to solve payment-related issues. For instance, Russia’s exporters could theoretically use ruble transactions to secure payments with Indian importers and conduct foreign currency transactions with Indian counterparts. However, in practice, such a system is limited by the huge negative trade balance. Nonetheless, 2024 showed some progress in that regard—from January to August, the combined exports of India to Russia constituted US$4.2 billion, marking a 35 percent increase compared to 2023. Considering the current pace of incremental growth, the target of US$100 billion trade turnover by 2030 that the countries have set seems to be more indicative than prescriptive.

Conclusion 

This year demonstrated that, despite prevailing prejudices, India’s commitment to its traditional ties with Russia remains resilient and not prone to sudden shifts. However, it also brought to light the challenges that need to be addressed in the coming years. Many of these, particularly in the military and political spheres, are speculative. In areas like trade and investment, despite record performances, both countries will require structural reforms. To further strengthen their ties, they must address these challenges swiftly and effectively in 2025. However, success will hinge on shifts in Russia’s approach to the West, as well as the stability of India’s positioning.


Ivan Shchedrov is a Junior Research Fellow with the Center of the Indo-Pacific Region and the South Asia and Indian Ocean Group at the Institute of World Economy and International Relations (IMEMO), Russia.

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Author

Ivan Shchedrov

Ivan Shchedrov

Ivan Shchedrov is presently a Visiting Fellow at Observer Research Foundation, New Delhi. He is also a research fellow at the Center of Indo-Pacific Region ...

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