Russia is in the process of negotiating a free trade deal with India in order to substitute part of the products and investments that were banned by sanctions enacted after the Ukrainian conflict erupted. Russia is now the largest oil supplier of India, with the country taking advantage of the discounted Russian crude.
Russia and India Negotiate New Trade Agreement
Russia and India are negotiating a new Free Trade Agreement (FTA) to increase the trading integration between the two countries, which has thrived after the establishment of Western sanctions on Russia. According to Reuters, India’s Foreign Minister Subrahmanyam Jaishankar stated that the deal was in a stage of “advanced agreement,” and that this might secure bilateral investments between the two countries.
Russia, which is now India’s biggest energy supplier, would be seeking to substitute throttled import products with those from India. On this, Russia’s Trade and Industry Minister Denis Manturov stated:
We need to find a niche in the products which India can replace. In civilian projects, we need as wide cooperation as it was before the sanctions.
In November, there were reports stating that Russia was seeking to acquire parts for cars, aircraft, and trains from India and other countries, to substitute for sanctioned, affected imports.
India-Russia Relationship Thrives
The cooperation between the two countries has not been affected by the Russia-Ukraine conflict, because India has not condemned Putin’s actions, maintaining public neutrality on the issue. This has allowed the country to take advantage of the discounted crude, sold at a discount due to the recent adoption of the Dubai benchmark, shunning the Europe-centric Brent benchmark.
On the other hand, India is trying to bring equilibrium to the trade balance. In December, the government of India sent a list of products that would be competitive in Russian markets, to gain permission to export them to the country.
The completion of an FTA between the two countries would simplify the introduction of foreign products in both markets, depending on the final determination of such an agreement. Russia is also finalizing another bilateral trade agreement with Iran, a country that has also been facing a wide package of U.S.-based sanctions, to increase their integration and trade levels without being limited by foreign determinations.
The dangers of overusing the U.S. dollar as a weapon for establishing sanctions was recently acknowledged by U.S. Treasury Secretary Janet Yellen, who stated that countries facing these sanctions would be determined to find alternatives.
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