Blitz Bureau
NEW DELHI: India made a major foreign policy statement last week by rolling out the red carpet to Russia’s President Vladimir Putin. In terms of foreign policy optics, the message is unmistakable – while the US and Europe seek to isolate Russia economically and financially, India will not play ball. Given the backdrop of trade talks with the US and the additional 25 per cent tariff slapped on India on account of its buying Russian oil, India has sent out an unequivocal message of multialignment to the Western allies. The same message – that India is an independent player on the global stage, not to be trifled with – would have rung across groupings such as BRICS and G20, where China is a dominant force.
That said, India’s trade ties with Russia would do with some beefing up — which is what the joint bilateral statement looks to address. The two countries appear to be keen on expanding the scope of trade beyond two big ticket items that are now under the global scanner, namely, defence and oil. The core impediment for India is financial – the country runs a trade deficit of $60 billion in bilateral trade of $69 billion, while it cannot use dollars under the prevailing sanctions to pay for Russian goods. However, Russia, too, needs to buy more goods from India to strengthen this arrangement. As the statement says, for trade in ‘national currencies’ to work, the trade balance needs to improve. Given this constraint, it is not surprising that the joint statement does not cement any bigticket deals.
Crucial among these is Russia’s willingness to allow Indian skilled workers to work there. It is not very often that two countries finalise immigration pacts such as this. It is also remarkable that this should happen amid anti-immigration sentiment in the rest of the world. Exchange of technology in fertiliser, critical minerals and nuclear reactors is a notable advance. A financial device to help Russia may be in the offing. The announcement of a Nifty-focussed mutual fund by a Russian bank, exclusively for Russian citizens, is possibly designed to divert surpluses parked in Vostro accounts into Indian markets so that they can earn some returns.
The BRICS spin in the pact is interesting, with India set to assume chairmanship in 2026. Whether a commitment to “economic, political and financial security” provokes the Trump administration remains to be seen. The strategic undercurrents of developing a transport corridor between the two countries are hard to ignore. The same holds true for making ships that can navigate the Arctic region.
The uncertainty around the trade deal with the US has also prompted India to push for economic engagement with large markets such as the European Union. New Delhi has also opened negotiations with New Zealand, Israel, Chile and Peru. It has also begun negotiations for a trade deal with Russia-led Eurasian Economic Union. India has pulled off a balancing act – preparing the stage for high profile visits from the Western world between now and February. These include heads of State from France, Germany, Canada and top EU officials – all shopping for a stake in India’s growth story, besides exercising strategic leverage. Indeed, multi-alignment has now been cast in stone.
