Bridging the Gap in India-Russia Trade

21/08/2025

India-Russia trade relations have seen a remarkable surge in recent years. Bilateral trade in goods has grown nearly five-fold in just four years, surpassing $65 billion in 2024. While this reflects growing economic engagement and deepening strategic ties, the picture is far from balanced. Russia's exports to India-driven primarily by crude oil-dwarf Indian exports to Russia, raising concerns about the sustainability of this trade relationship. The primary engine behind this growth has been India's increased import of discounted Russian crude oil, especially after the onset of Western sanctions following the Ukraine conflict. India, acting in its strategic and economic interest, has leveraged this opportunity to reduce energy import costs. However, the trade imbalance is stark: nearly 90% of the trade volume is accounted for by Russian exports, while Indian exports remain stagnant at around $4-5 billion.
This skewed trade structure raises both economic and strategic challenges. From an economic standpoint, persistent trade deficits exert pressure on India's foreign exchange and diminish the benefits of a diversified trade portfolio. Strategically, a one-sided trade relationship can lead to dependency, which may limit India's flexibility in navigating global geopolitical dynamics.To address this imbalance, both countries need to make concerted efforts. India must focus on enhancing its export basket to Russia. This includes sectors where India has proven strength-pharmaceuticals, machinery, IT services, and consumer goods. Trade facilitation, improved logistics connectivity, and banking channels insulated from Western sanctions are crucial. The rupee-rouble payment mechanism, still underdeveloped, needs greater clarity and acceptance.
On the Russian side, easing non-tariff barriers and regulatory challenges for Indian businesses will help foster trust and reduce entry barriers. Moreover, a push toward joint ventures and co-production in defense, space, and energy sectors can ensure long-term mutual gains rather than mere transactional trade.Finally, India must also seize this moment to diversify and modernize its trade strategy. A stronger export policy, targeted export promotion schemes, and incentives for MSMEs to explore Russian markets can make a difference.India-Russia ties are rooted in decades of strategic cooperation. But for the economic leg of this relationship to be sustainable, the trade imbalance must be addressed with urgency, innovation, and mutual commitment. Only then can both nations truly realize the potential of a balanced and resilient economic partnership.

Photo Gallery

BSE Sensex

NSE Nifty