Russia Back in Modi: How India Flirts with Moscow in Exchange for Cheap Oil

Indian Prime Minister Narendra Modi is flying to Moscow to meet Vladimir Putin. It’s a big deal: Since the full-scale invasion began, India has distanced itself politically from Moscow. Officially, Delhi condemned the invasion of Ukraine, but, like China, it helps Russia circumvent sanctions and in return gets a huge discount on Russian oil. Modi, whose party performed modestly in parliamentary elections and whose authoritarian tendencies have led to a cooling of relations with the United States, needs foreign policy victories and is trying to benefit from his position as a mediator between Russia and the West.

Russia is closer to Europe and China
Immediately after his re-election for a third term in June, Modi attended the G7 summit in Italy, where he met with Macron, Biden and Zelensky. However, after that, the Indian prime minister pointedly ignored the Swiss Peace Summit on Ukraine, sending a delegation there led by Pawan Kapoor, India’s ambassador to Russia since 2021. However, Kapoor also did not sign the final resolution of the summit. This is not so much a challenge to the West as an emphasized neutrality of India. At the same time, Modi was a welcome guest at the G7 meeting, which is well reflected not only in Indian but also in Western media. Obviously, Western countries have not lost hope of winning India over to their side or at least preventing Delhi from getting too close to Moscow. Against this background, there are even speculations that European leaders want to use India’s neutrality in negotiations to resolve the military conflict in Ukraine.

Perhaps the image of a parliamentarian, a “friend of peace” (as India was called at the Swiss summit) and a mediator between Europe and Russia is politically advantageous for India, but the country receives direct economic benefits from its friendship with Moscow in the form of cheap oil, and for now it seems that this argument outweighs it. In order to visit Moscow, Modi skipped the SCO summit in Kazakhstan on July 3–4. This is obviously a jab at the initiator of the summit, China, with which India’s relations have cooled for several years due to border conflicts.

At the same time, the visit to Moscow is also a message to the West.

Split with the West
Bloomberg and Reuters are quick to acknowledge the failure of Russia’s “cancellation” . Chinese leader Xi Jinping visited Moscow in 2023 after February 2022 , but India has historically been more closely tied to the West than China, and even after the full-scale invasion, it has clearly distanced itself from Moscow , so Modi’s visit looks more defiant. Although India has refrained from openly condemning the Russian invasion in UN votes, leading Indian newspapers have condemned Russia’s invasion of Ukraine since 2022. The tradition of annual October Russian-Indian summits, which had been held without interruption for more than 20 years (the first was held in October 2000 at the initiative of Vladimir Putin), was interrupted. In September 2022, at the SCO summit in Kazakhstan, Modi told Putin that “now is not the time for war”, expressing his solidarity with Western countries criticizing the war in Ukraine.

But recently, India’s diplomatic rhetoric has been changing: now, not only does India not keep aloof from Russia in the public sphere, but, like the Kremlin, it also criticizes the West. There are reasons for this: the strengthening of authoritarianism in India in recent years has drawn criticism from Western countries, and the country’s authorities are responding to it with increasing harshness. On June 28, Indian Foreign Ministry spokesman Randhir Jaiswal openly condemned the United States and rejected the accusations of religious intolerance, oppression of minorities, and illegitimacy of court decisions in the 2023 report of the United States Commission on International Religious Freedom against India.

Now, India not only does not keep aloof from Russia in the public sphere, but, like the Kremlin, also criticizes the West
Jaiswal stressed that the US should not interfere in Indian affairs, which the US, he said, does not understand. Moreover, the diplomat made counter-accusations: in 2023, representatives of the Indian diaspora in the US (more than three million people) faced “a number of hate crimes”, racism and vandalism in sacred Hindu places.

A recent interview with former Indian Foreign Minister Kanwal Sibal also captures the country’s message to the West: “If you are unable to manage your relationship with Russia, it is not our problem and not a reason to cut our ties.” In the interview, Sibal is quick to criticize the democratic institutions of the United States, because India itself can show what the “world’s largest democracy” looks like in action: the recent parliamentary elections not only saw the highest turnout in the country’s history (around 70%), but also the highest turnout for women, and an unexpected loss of the majority for Modi’s party, which would be difficult to fake.

At the same time, it does not seem that India is going to sever ties with the United States, for which it is one of the main sources of “human capital”: the country supplies the West with specialists in the technical sector. India’s mission, as formulated by Modi, is to transform the world with the help of artificial intelligence ( India’s key slogan at the G7 summit was “AI for all”). The World Bank regularly issues loans for the training of Indian specialists in this field. For example, in 2023, a loan of $255.5 million was allocated for the development of technical education in India. Moreover, Joe Biden’s cabinet declared the country a key partner in the US Indo-Pacific Strategy.
India has always been sensitive to Western dictates about what it should be, but criticism has become particularly acute in recent years. This is also due to Modi’s attempts to cleanse India of its colonial history, which he understands not only as European colonization but also as conquest by Muslim societies in the Middle Ages. The ruling party believes that Indian national identity should be associated with Hinduism, a religion they consider to be the spiritual core of India. This has manifested itself, for example, in an attempt to rename the country from India to Bharat, as Hindus call it. However, the renaming has not yet succeeded . Almost 15% of India’s population are Muslims, and they have not supported the government’s initiative to pretend that they have no connection to the country.

The Modi government is also seeking to nationalize the country’s economic model, which is reflected in the strengthening of the national currency and the transition to self-sufficiency under the swadeshi (literally, “one’s own country”) model, a movement that emerged in the early 20th century as a protest against trade in British goods. All of this is becoming additional lines of rift with the West.

Cheap Oil and Arms: What Modi Wants from Putin
The price of rapprochement with Moscow is easy to calculate in concrete amounts. India receives Russian oil at a huge discount, and pays for it in rupees, which remain within the Indian economy. According to The Hindustan Times, thanks to this policy, $25 billion has remained in India over the past year.

India gets Russian oil at a huge discount and pays for it in rupees
In 2023, oil supplies from Russia increased sharply (140% of 2022 volumes, as reported by the Times of India). Indian oil refineries purchase Russian raw materials for further processing and sale, mainly to Europe. According to the Indian Chamber of Commerce and Industry, the country’s income from oil sales to European countries over the past year reached a total of $18.4 billion. For Russia, however, things are not so clear-cut: on the one hand, trade helps circumvent sanctions (trade turnover increased fivefold – from $13 billion in 2021 to $65 billion by the end of 2023), on the other hand, the need to pay in rupees largely offsets the benefits.

India has been on the rise in recent years in every sense. Having overtaken China in population (1.4 billion), it is experiencing rapid economic growth – in the last fiscal year, which ended in March 2024, the country’s GDP increased by 8.2%. Cheap Russian oil, of course, only contributes to this growth. But despite the economic growth, the ruling party is losing popularity, which serves as an additional incentive for Modi: he needs success at least on the international stage.

First, he may try to get an even bigger discount on oil. Second, the meeting will discuss a new trade route – the eastern sea corridor connecting Vladivostok and Chennai, the capital of the state of Tamil Nadu on the east coast of Hindustan. Modi flew to Vladivostok in 2019 to discuss this project. This route would simplify logistics in the context of intensive trade between the two countries. Third, India, which has stable relations with European countries and the United States in the field of defense, is going to expand its long-standing military ties with Russia. In 2021, the countries signed an agreement on military-strategic cooperation, regular joint naval exercises, exchange of military personnel and technological developments for the next 10 years. However, Modi and Putin may now prepare a new agreement. First of all, it will concern cooperation in the field of logistics and the transfer of new technologies to India, already tested in real combat in Ukraine. Modi will probably seek to ensure that Russia produces military equipment in India.

Modi likely to push Russia to produce military equipment in India
In terms of military cooperation, India is also flirting with the US. Modi visited Washington in late June 2023, and his visit was timed to coincide with an agreement to expand India-US military cooperation and expand the logistics exchange agreement signed in 2016. The agreement allows for refueling and repair of warships of the two countries in each other’s territories. The India-US military relations report says that the US is India’s largest trading partner in 2022-23. The parallel dialogue with Washington and Moscow can hardly be viewed as anything other than bargaining, with each side trying to squeeze out the most favorable terms for itself.

The problem with this seemingly very advantageous position for India is one: Delhi, in the current conditions, cannot refuse economic partnership with either side, and therefore cannot become a real ally of either the West or the Kremlin, which is most likely understood by both. And this means that India cannot count on making any major concessions.