India and China have become the main markets for Russian raw materials subject to Western restrictions for the invasion of Ukraine. As Russian Deputy Prime Minister Alexander Novak announced at the end of December, almost all of Russia's oil exports (90%) were destined for these countries, enabling Moscow to maintain funds for military operations.
Let us remember that Vladimir Putin, having lost the European market, offered “friendly countries” a discount on oil. According to Anisree Suresh, a researcher at the Indian Center for Public Policy Research, India purchased raw materials at discounts ranging from $20 to $35. per barrel. Thanks to this, the country was able to save approximately $3.6 billion. – Politico reports.
As we wrote on money.pl, importing cheap raw materials allowed India not only to cover the needs of its economy, but also to process and sell them all over the world, including Europe. Throughout 2023, India bought more than half a billion barrels, ten times more than before the Russian invasion of Ukraine, according to data from research firm Kpler.
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India puts Russia against the wall
Everything changed at the end of last year, when India significantly reduced the import of Putin's “blood oil.” In December, shipments arrived from Russia Lowest level in 11 months, down 16-22 percent. – Reuters reports.
Russian media claimed that this was the result of problems with rupee payments. But Indian Oil Minister Hardeep Singh Puri denied this information. – No problem with payments. It is a question of the price at which our refineries will buy crude oil Puri said, quoted by the Indian newspaper “Economic Times”.
He also emphasized: “If the Russians don’t offer a good discount, why should we buy from them?” The Economic Times newspaper quoted government data stating that Russian oil imports in November 2023 were the most expensive in a year. Indian refiners paid an average of $85.90. per barrel.
The Indian minister stressed that there is an abundance of oil in global markets and there will be no restrictions on supplies. Last December, his country increased its imports from Saudi Arabia and Iraq.
Russia needs oil revenues. However, the price of Brent crude oil must be at least US$80. per barrel so that the Kremlin can finance the war. When Moscow needs more money for its budget, Delhi increases the pressure. India views the matter through the prism of self-interest. Because they know that they are an important partner for Russia, they set difficult conditions – says Agnieszka Legocka, an analyst at the Polish Institute of International Affairs, in an interview with money.pl.
So India is putting Russia against the wall. Putin will have to compromise if he still wants to keep his biggest clients.
– India is still a relatively not rich country, therefore The opportunity to buy cheaper oil from Russia was very attractive to them. Adam Goszczak of the Polish Economic Institute explains that per capita GDP, in purchasing power parity, is 2.5 times lower than in China, and up to 6 times lower than in Poland.
But it notes that India is a country that relies heavily on imports of fossil fuels, on which its energy mix largely depends.
It may be noted that although India's actual oil imports from Russia have declined from over 2 million barrels per day in July to 1.5 million in December this year, they are still much higher than what they were in December 2022 (991,000). The volume of trade exchange between India and Russia increased from about 10 billion US dollars. In 2021, it will reach approximately $50 billion, most of it from crude oil. But India's contacts with Saudi Arabia are not new. In 2021, India's crude oil imports from Saudi Arabia reached $15 billion. – Juszczak points out.
There will be no division
Agnieszka Leguka adds that although India is taking advantage of the situation, it is not against Russia.
– India views the matter through the prism of self-interest. They balance the West and Russia. Given their location in the Global South, they are also an important partner of the United States. The Americans have become very active in diplomacy to balance India's rapprochement with Russia. Due to the fact that both sides are striving for cooperation, Delhi benefits from this game – notes the PISM analyst.
However, India and Russia have strong economic and defense ties. Moscow has been the main arms supplier to India for years, and about two-thirds of military equipment is currently purchased from Russia, although New Delhi has tried in recent years to diversify suppliers.
The recent visit of Indian External Affairs Minister Dr. Subramaniam Jaishankar to Moscow made it clear that New Delhi intends to continue cooperation with Moscow. Jaishankar met with both Putin and Russian Foreign Minister Sergei Lavrov.
According to what was reported by the Nikkei Asian News Agency, plans for joint production of military equipment were discussed during the meeting. – We have taken concrete steps – said Lavrov. Jaishankar emphasized that relations with Russia have served India well.
The Indian English daily Deccan Herald quoted Minister Jaishankar's statement, which fully illustrates the Indian point of view. – The country that has the largest number of friends and the least number of enemies is, of course, a country with intelligent diplomacy. Why does the state limit its friends? – he was asking.
There is another reason. India competes with China on many issues, so for geographical reasons cooperation with Russia seems a natural outcome. For these reasons, among others, India refuses to publicly condemn the Russian attack on Ukraine – notes Adam Juszczak.
Russia flooded with rupees. Delhi has the solution
Even if crude oil imports from Russia are limited, India plans to increase its orders for other raw materials, for example imports of Russian coke, to help steel companies – wrote the newspaper “India Times”.
India uses about 70 tons of coke annually in steel production, with imports covering 85 percent. Country request. Australia had been the largest supplier by far, but in the fall there were serious disruptions to production and thus to supplies. Although India also imports these raw materials from the United States, Indonesia and Canada, it is also increasingly looking to Russia.
Trade with India brings tangible income to Russia. Only on Moscow oil exports – according to estimates reported by Politico newspaper – Earn $1 billion worth of money per month.
India had to offer Russia a solution of reinvesting this money in its economy, which Lavrov himself admitted. What are the areas involved? He didn't say this. However, it is no secret that the Russians are already involved in nuclear energy in India, and further cooperation is set to also include small reactor technology.
India already has experience in handling Russian technology – for example, VVER 1000 reactors, two of which are already operational at Kudankulama, and four more are being built. The agreement signed in December between India and China assumes a further expansion of this power plant with two more units, this time based on VVER 1200 reactors – notes the PIE expert.
India will not distance itself from Russia, but by gaining an advantage on the international stage, it will increase pressure on Moscow by pursuing its own interests.
Przemyslaw Ciesak, journalist at money.pl
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