Trade Surplus Vs Oil Discount: India's Tight Rope Between US And Russia

New Delhi has begun counting hours to Russian President Vladimir Putin's landing in the country. During this visit, strategic trade relations between India and Russia are likely to hog the spotlight.

Putin's visit to India comes at a time when the country seems to be walking on a trade tight rope, with the United States on one end and Russia on the other.

Half of the 50% tariffs levied on Indian imports by Washington are imposed as a punitive measure for New Delhi's continued purchase of Russian crude.

India and Russia have a trade volume of approximately $69 billion — of which Indian exports to Russia make up only close to $4.8 billion while Russian imports to India amount to around $65 billion. Therefore, the scale is not just tipped in favour of Russia, but the trade deficit amounts to the second largest deficit India has with any country after China.

Whereas, on the other edge of the rope stands United States, which is not only India's largest trading partner with a trade volume of nearly $132.2 billion, but also one of the only two economies out of its top 15 trading partners it has a trade surplus with.

India's exports to the Washington amount to approximately $86.5 billion of the total trade volume. Seafood, iron and steel, nuclear reactors, machinery, pharmaceutical products, gems & jewelery, apparels and textiles, and electrical machinery manufactured in India are some of the goods that have high US exposure.

After India was hit with Trump administration's 50% tariffs, most of these sectors felt the impact with merchandise exports softening to $34.38 billion from $38.98 billion in the year-ago period in October, as per government data.

Meanwhile, India's oil imports from Russia have only grown in recent years, mainly because of Moscow's steep discounts on its main oil exports which reportedly went up to $35 a barrel sometimes.

Till 2022, oil imports from Russia had not exceeded $5 billion in value. But in 2023, India bought Russian oil worth $39 billion. In the last two years, India has imported Russian crude oil worth $54 billion and $57 billion, respectively. Petroleum products account for nearly 84% of all imports from Russia, according to NDTV Profit calculations.

In contrast, exports from Russia are highly fragmented with not even a single category accounting for even $1 billion worth of exports to Moscow as of FY25, as per the calculations.

Therefore, an impetus to the upcoming meet is discussing the huge trade deficit while also looking at doing meaningful exports of pharmaceuticals, agriculture, food products, sources told NDTV Profit.

In this backdrop, its remains to be seen how India will balance its trade ties with Russia amid the evolving relations with the United States.