Economic rationale for India to maintain ties with Russia
This article is authored by Aditya Bhan, ORF.
Russia is now the world’s most heavily sanctioned country, with unprecedented punitive action targeting its energy exports, central bank, and other sectors. Given Russia’s economic resilience amid such economic restrictions and India’s dependence on Russia for its defence and energy requirements, this issue brief highlights the economic rationale for New Delhi to maintain existing trade ties with Moscow despite continued geopolitical pressures to the contrary.
Since the outbreak of the Russia-Ukraine war, there have been appeals and policy advice from various quarters—both in the West and domestically—for New Delhi to abandon its long-standing ties with Moscow and join “Team America”. However, India has remained cognisant of securing its geopolitical and geostrategic interests through its dealings with Russia.
For context, on 5 December 2022, the G7, Australia, and 27 European nations imposed a price cap on Russian shipborne exports of crude oil to curtail Moscow’s ability to bankroll the Ukraine war and maintain stable prices worldwide. The price cap, following a European Union (EU) ban on purchasing seaborne Russian crude oil, was set at $60 per barrel, with a review to be held every two months starting in mid-January 2023.
Russia is now the world’s most heavily sanctioned country, with restrictions imposed to block its access to the international financial system and bank accounts needed to fund its war efforts. Export controls were also implemented to restrict Moscow’s ability to import products needed to equip a modern military, such as computer chips. At present, over 30 nations, including the United States, the United Kingdom, Canada, Australia, Japan, and the EU states are involved in this unprecedented punitive effort, applying price caps on Russian energy exports, freezing Russian Central Bank assets, and restricting Russia’s access to SWIFT, the leading system for international financial transfers.
Given Russia’s economic resilience amid such economic restrictions and India’s continued dependence on Russia for its defence and energy requirements, this issue brief assesses the economic rationale for New Delhi to continue to maintain ties with sanctions-afflicted Moscow.
The paper can be accessed by clicking here.
This article is authored by Aditya Bhan, ORF.
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