India and Russia have a mutually beneficial relationship going back decades, and since the full-scale invasion of Ukraine, India’s strategic importance for Russia has grown considerably. This hasn’t gone unnoticed by the Trump administration, which has slapped additional tariffs on India for buying Russian oil. To maintain its position as an emerging global powerhouse, India must navigate not only an unpredictable U.S. foreign policy, but also a more assertive China that is exploiting Russia’s asymmetrical dependence, and a Europe that is unhappy about New Delhi’s ties to Moscow.
The transcript was automatically generated and not edited prior to publication.
Alexander Gabuev. Welcome to the Carnegie Politika podcast. I'm Alexander Gabuev, director of Carnegie Russia Eurasia Center in Berlin. Today's episode is dedicated to Russia's relationship with India. President Vladimir Putin has been in New Delhi for a state visit on December 5th after four years of absence. Since Russia's full-scale invasion of Ukraine, India has become the second largest buyer of Russian hydrocarbons and is one of the lifelines for Putin's war economy. However, the relationship is much deeper and goes back decades. My guest today, who will help me to unpack all of the complexity and nuance, is Pankaj Saran, a convener at NatStrat, a Delhi-based independent center for research on strategic and security issues. He has 40 years of experience in the Indian diplomatic service, including as ambassador to Moscow from 2016 to 2018, and a deputy national security advisor to Prime Minister Modi. Welcome, Ambassador. It's great to be with you.
Pankaj Saran. Thank you, Sasha. A pleasure to be on your show. Thank you so much for inviting me.
Gabuev. Why don't we start with trying to locate the relationship with Russia on the list of Indian foreign policy priorities? Prime Minister Modi and President Putin always call it a very special relationship. What's so special about it from the Indian viewpoint?
Saran. Thank you, Sasha. Look, the point is that President Putin has been in power for the last 25 years. And in these 25 years, he's dealt with several Indian prime ministers. Prime Minister Modi, of course, is the most recent. But his relationship with Indian prime ministers, Indian governments, goes back a long, long way. So even with the predecessor, Dr. Manmohan Singh, President Putin had a good relationship. So I think there is something more to the relationship than just individuals and individual personalities of the prime ministers of India. The nomenclature of special relationship was actually given to the relationship in 2010. Which is interesting because by 2010, we had had a huge breakthrough in our relations with the United States. We had signed the nuclear deal in 2008, and that was the peak of our Indo-U.S. ties. And so then it was decided to term this relationship as a special and privileged relationship. So the drivers of the relationship are many. They go back to historical record, to Russia coming to India's help at a time when the West had basically shut us off, to energy, to geography, to the fact that we don't have bilateral tensions or conflicts with each other because we don't have a border. So in many ways, there is a certain bond that has tied the two countries ever since, I would say, more or less, India's independence. I would say the only period in which the relationship actually dipped was the first decade of the 90s, 1991 to 2000, when Russia pivoted away from Asia and was much more focused on developing relations with the US and Europe and the West in general. But apart from that, overall, both in the Soviet times and the Russian times, the basic pillars have continued. Although I must say, as you know, Russia is not the same country as the Soviet Union. So obviously the relationship trip has undergone also a qualitative change. It's not what we had with the Soviets. The world has also changed. India's relations with the United States today are totally different from what they were 1991. So there is a lot of change, but because of some of these factors, there is a certain constancy in this relationship, and that has endured over time.
Gabuev. Before we continue, I will urge all our listeners to hit the subscribe button in order not to miss a new episode of this podcast. We are very interested in your feedback as well, so leave us some comments. Well, Ambassador, I think that the most pressing issue from where I sit in Berlin right now in the relationship between India and Russia is war in Ukraine. India as a country that's known for its interest in supporting international law. And at the same time, when Russia violated this law by annexing Crimea in 2014 or the full-scale invasion of Ukraine in 2022, The criticism towards Russia's policies from India was somewhat muted, which causes understandable frustration in the West. How you would explain this muted reaction of New Delhi to Russia's flagrant violation of international law?
Saran. Yeah, no, look, I'm very glad that you asked this question and I fully understand where you are located. And clearly, you are really literally very close to the epicenter of this war and the conflict. But the position India took from day one, and even prior to the invasion, has been pretty consistent in the sense that we have at every formal platform, both India, within India and at the United Nations and everywhere else, repeatedly asserted that we stand for certain principles of the UN Charter and and principles of international law, which are inviolable and which are sacrosanct. So we maintain that very consistent record. Secondly, the position India has taken has been pretty much in tune with and according to the rest of the Global South, which have actually more or less taken a very, very similar position. So if you were to look at the details, the Global South as such, and India in particular, we have stressed more on the dialogue part of it rather than the conflict part of it. But while also reiterating the fact that as countries of this part of the world, for us international law and the rules become very, very important. The focus of the Indian position has been on dialogue rather than the battlefield. Which is why Prime Minister Modi has repeatedly conveyed to President Putin that this is not the era of war and that the solution has to be found on the dialogue table. Having said all of that, we know we are victims also of violations of international rules and international laws and expansionism and everything else that Russia is doing or is alleged to be or is accused of doing because we have our territory under occupation by two of our adversaries, both China and Pakistan. We have been the victim of invasions by both these countries. So we know what it means to have wars, to have territory occupied. And our relationship with Europe is today much stronger than it was three years ago. So that also is a consequence, if I may say so, of what happened in 2022. In fact, we've almost converted a challenge into an opportunity for significant upgradation of our ties with even the smallest Europeans in the Baltics, in Eastern Europe, Poland, Central Europe, et cetera. So I think it is clear that international rules, international law has to be respected, but we would also like to give equal focus to the need to shift away and we are talking to both sides. And I think in this summit, which you mentioned when President Putin was in Delhi a few days ago, I think the focus was hugely between the two leaders on the peace efforts. And in this, I would only say that when India talks of its full support to the peace efforts on Ukraine, it is in effect supporting 100 percent the efforts being made by the current U.S. administration and the president to find some way to get a peace deal or at least to cease fire. In that sense, we believe and I believe that we are actually very much on the side of the American peace effort. We have a big stake in it more than many, many other countries.
Gabuev. One very important aspect of the relationship is obviously military-technical cooperation. Russian equipment has historically been the backbone of the Indian armed forces, or Indian Navy, even Indian Air Force. Over the last two decades, India has diversified quite a bit, purchasing equipment from France, other Western countries. Russia has been delaying delivery of its systems like the aircraft carrier, the S-400s. It also needs some of its systems, particularly air defenses, for war in Ukraine. When the shooting is over, hopefully sooner rather than later, Russia will also need the systems to replenish its arsenals. Do you expect India to continue its reliance on Russian systems? And what will be the likely trajectory of this technical military cooperation?
Saran. See, there is a legacy factor. I mean, about 60% or maybe more of our inventory is Russian origin. So we need the Russians to help us to maintain. Otherwise, the 60% is going to be junk. We can't afford that because we have live borders both on our west and our north. We don't have the luxury. We need maintenance, spare parts, servicing and of course indigenization. So that legacy component is going to remain for a fairly long time. Insofar as the diversification is concerned, you're absolutely right. Let us say from 2008 or 10, we have diversified away from, this was well before Crimea, well before the invasion. The reason for this was that it was only in 2008 that the Western market opened up to India. Till then, we had no choice. Everything was shut to us, the technology, the platform, equipment, the military technologies. So India had nowhere to go except to Russia. Now that those options have become available, there has been a big change in the scenario. And thirdly, even as all of this is happening, what we have taken away from all of this, of the impact of geopolitics on India's military preparedness is the following: that you have to stand on your own feet. You have to develop your own defense industry. You have to modernize. You have to bring in the private sector and you have to have joint ventures. So there is a revolution underway in India or in the defense industry. We have taken away multiple lessons from the geopolitical shocks of the last one or two decades. Going further into the future, I agree with you that Russia is, because of the war and the and the situation in Ukraine, in a different position than it was earlier. So in the future, what I see is much more reliance in India on indigenization, on domestic capacity, and this will apply both to either Russian origin new stuff or even from the West. The focus is going to shift away from just a buyer-seller kind of relationship. More towards manufacturing within India, more towards persuading partners to give us the technologies we need to do joint production both for the Indian market and for other markets also. That's the way I see it. In terms of fresh purchases from Russia, this is a need-based approach. I think Indians will be more selective in the kind of stuff they buy from Russia. The terms of the contracts and all will be more negotiated in a more hard-headed way. This is, but even in the last 20 years, or let's say last 10, 15 years, if you notice and study the relationship, the emphasis or the salience of the military aspect has reduced. And other sectors of the relationship have become more prominent. This is deliberate.
Gabuev. So one of the new important sectors in the relationship is obviously energy. There is this historic legacy project of Russia building nuclear power plants. But also India has increased its imports of Russian hydrocarbons over the last four years from nearly zero to about 36-38% of India's oil imports. Now President Trump has slapped tariffs, claiming that this money is funding Putin's war. There are sanctions against Russia's number one company, Rosneft, which owns an oil processing plant in India, number two company, Lukoil, number three, number four. So we see in the customs statistics that the purchases are going down. Do you expect them to go to zero again? And what's the strategic calculus in New Delhi with regard to Russian oil?
Saran. A lot has been said about this. Look, the fact is, as you mentioned rightly, till 2022, we were importing nothing from Russia, despite the fact that we had excellent political relations. Now, you have to ask why. There are many reasons, but obviously India's needs were being met from the Gulf, from the Arab states, even from Latin America, and even to some extent from the United States. So we did not feel the need. Second, most of the, or in fact almost all the Russian hydrocarbons were being exported to the European market. So Europe for the last 40, 50 years, since the since basically the post-World War II period, has been living off cheap Russian energy. India was not. So the accusation that in the last three years, India has purchased so much that it has actually helped to strengthen the Russian war machine is a little misplaced because you're comparing the three-year record with the 50-year record. So it doesn't add up. That's the first point. The second point is because we import almost 90% of our hydrocarbons because we are we're not self-sufficient, the least that the Indian planners thought they should do is to build refining capacity in India because you cannot have a situation. The Indian economy cannot survive if it has to also import crude, but it also has to import the refined product. We don't have the foreign exchange to pay for that. So since we we have no option except to import the crude, the second best option, strategically speaking, was to develop massive refining capabilities. So that was the background to developing. It had nothing to do with Russian crude oil. So today we have huge refining capacities. Number three, when we started this in post-2022, there were no sanctions on Russian oil. There was only a cap of $60 per barrel. We therefore were well within. We didn't violate any Western law when we imported. We were encouraged at that time by the Europeans and the Americans because that was to stabilize the global market. Otherwise, it would be very volatile. Even today, Europe and countries within Europe are importing all kinds of Russian energy sources. All of these factors went into what finally transpired in the last three years. But the spike in imports was largely determined by market forces, by the fact that you were getting discounted oil and the fact that we were already living through a post-COVID shock. The Indian economy was in a very fragile condition. So if you were getting the discounted oil without violating any law, people said, okay, that's fine. It was a commercial decision. Now, we may go back to zero or we may not. I think what has happened is we have discovered the benefits of the Russian market. Today, these companies have been sanctioned. The sanctions have come into force. What I know is that our companies will be very reluctant to violate these sanctions now that they are in place. They were not in place a few weeks ago. So, I see that it is possible that the imports will come down. But that's now. But what happens if there is a peace deal? What happens if sanctions are lifted? What happens if the Russian energy market opens up to the rest of the world? Who knows? But let us face it that India is the world's second largest importer of hydrocarbons. This reality will determine behavior of India in the global market. And we will of course try to diversify imports. We are also ready. We've told the Americans we'd love to buy from them.
Gabuev. The relationship in trade between India and Russia is very imbalanced. I think that currently last year trade stood at around 64 billion US dollars. Before the war in 21, it was 13.5 billion dollars. This year it's probably about the same figure, sixty four sixty five billion. But the bulk of that is Russian exports to India, be it hydrocarbons, be it military equipment. Russia imports very, very little from India. And we know that President Putin and Prime Minister Modi have discussed this issue. What could be the practical ways to address it? Because India is, after all, far away, unlike Europe or China. It doesn't have a common border with Russia. It doesn't have the same manufacturing capacity as China. So what could be the solution there?
Saran. It's one of the biggest talking points between India and Russia, and the balance is completely skewed in favor of Russia. So it's one of the important items on the bilateral agenda. And we are telling them that you lift non-tariff barriers, you identify areas where we can invest or you invest and so that you re-export back to your market. There are sectors where we believe we have a comparative advantage like pharmaceuticals or there are other areas of investments like shipbuilding, fertilizers, some areas of technology, etc. But yes, this is a constant talking point. We have to balance the trade because otherwise it will become unsustainable. The problem is that we also have a similar imbalance in our trade with China, unfortunately. So there is no immediate solution. And I think part of it also is that there are structural realities of the Russian economy, because if you have an economy which is growing rapidly, then demand also is buoyant. But in this case, that is not the case. So we recognize that, that you need structural reform of the Russian economy to kickstart some of the domestic demand. But the India of today is not what it was 20, 30 years ago. We have more to offer. even electronics, automobile parts, engineering goods. We are looking at the full menu and in every meeting this point is raised that you have to balance the trade because the other mean midterm band-aid kind of solution is that then we have to find the currency in which to trade because that's also linked to the pattern of the trade. So in the last few years, we have, you know, started talking about settlement and national currencies. Otherwise, you'll find a huge outflow of hard currency or dollars from India to Russia. I think we need to have greater Russian awareness of what India offers as an economy for the Russian market. They need to drop some of their phytosanitary conditions, standards, non-tariff barriers. Also, we are now beginning increasingly to focus on better connectivity, as you mentioned, the distance. Both the North-South Transport Corridor and more recently in the last few years, the corridor maritime between Chennai and Vladivostok. We are trying all of these things. We are also looking at tourism. We are looking at export of Indian manpower. That, we believe, has big potential because it's a very good mutual complementarity between Russia's needs and India's capabilities on manpower and, of course, tourism. So it's a multi-pronged effort, I would say.
Gabuev. Yeah, we've seen that there was a deal signed on setting up an Indian pharmaceutical production in Russia, and definitely India is one of the global leaders in producing active components that you need for any medical drugs. So indeed, some of the areas have been addressed. I think that India and Russia are founding fathers of BRICS. Moscow lobbied very hard for India to be included in the Shanghai Cooperation Organization, which was also achieved together with Pakistan. But today, many people view these two organizations, SCO and BRICS, as becoming increasingly influenced by the Chinese. They are vehicles for Xi Jinping's foreign policy and positioning of China as the global alternative to US-led institutions. Do you see that way? And do you feel that Moscow and New Delhi are still seeing eye to eye in Shanghai Cooperation Organization and BRICS?
Saran. On China, of course, we are very, very acutely conscious and we keep a very close watch on what China is doing in these organizations and how they see these organizations as promoting a kind of alternative world order that is more attuned to Chinese strategies and ideologies. India would not be ready to build or to cooperate in such a project which is a kind of a China-led reordering of the world using these organizations. That is quite clear and from that point of view we have a choice: we either step away and walk out or we remain inside. So when the question is, are you better inside the tent or better outside? So as of now, the calculation is that we are better inside the tent. Therefore, in these meetings at all levels, and right up to the summit, there are disagreements which are open. Every country is witness to them. Like, for example, on the BRI, India is the only country in the Shanghai Cooperation Organization which has refused to endorse the BRI concept. We are the only one. So when it comes to the crunch, we have no problem being alone because we believe on a certain issue. But here I want to also distinguish between BRICS and SCO - they're two different bodies and animals. BRICS is a multi-continental, it was supposed to be developing or emerging economies spread throughout the world. The first summit was held in Yekaterinburg, Russia in 2009. India was there. At that meeting, I remember, Brazil, India and South Africa were actually pitted against Russia and China on the whole question of reforming the Security Council. So you had these two who were members of the Security Council and the rest of the three who were not. But now BRICS has expanded. A lot of countries who were considered to be pro-West or not exactly, you would call them in the Chinese or the Russian camp, have joined in. The expansion of BRICS is going to somehow dilute its primary focus, but it also reflects. And you have to ask yourselves question, why have so many countries joined BRICS? I don't think you can attribute this to the brilliant nature of Chinese diplomacy. There is something more happening in the world which suggests why these countries want to join. As far as Shanghai is concerned, you're right that we had a situation where the Russians were pitching for India's membership. The Chinese were pitching for the Pakistanis. But in the case of Shanghai, it's not a global organization. It's a Eurasian organization. And when you look at the Eurasian landmass, it is important for India to be right there up in the center. Otherwise, we will be leaving the vacuum strategically and politically to China and Pakistan and, of course, Russia. We don't want to do that.
Gabuev. Finally, I also want to stay on China because something I hear pretty frequently from Indian strategic thinkers is that New Delhi doesn't want Moscow to become a junior partner of China, a trajectory which has been increasingly pronounced after Russia's full-scale invasion and its destruction of its relationship with Europe. So India wants to provide Russia with some hedging options in order not to become a junior partner of China. How much does this sound right to you? How much does the China factor play a role in the in the Russian relationship for New Delhi?
Saran. No, you're right. It plays a role. I mean, for sure. I mean, if you ask me, what would India like? I mean, would we like a weak Russia and a strong China? Or would we like a strong Russia and a weak China? As far as we are concerned, our preference would be to have a strong Russia and a weak China. I know that's not going to sit well in Europe at all. But here is the challenge: how do India and Europe talk to each other on these on these questions? A subservient Russia to China is a huge strategic challenge to India. Because anything which adds to the accretion of Chinese power - strategic, political, military, diplomatic - is a great problem for India. Because that is our number one challenge. So that's quite clear. Secondly, our assessment is that the Russians are also very conscious of the fact that they do not want to put all their eggs in one basket. They are going out of the way to keep India in play. They don't want to outsource or mortgage their Asia relationship to just China. They want India to be kept in play. It also helps them, because if we had a situation where Russia tailored its relations with India and saw its relations with India only through the Chinese eyes, we would have seen visible evidence of that. In many domains which are highly sensitive, we don't see that. Russia clearly itself wants to keep the India card and the India option open. There is a mutuality out here between India and Russia. And who knows, if tomorrow the Americans and the Chinese start talking to each other and there is a kind of a transformation of that relationship between the US and the Chinese, I can see that will drive countries like India and Russia closer together. And you could actually see the Russia-China axis of the nexus weakening a little bit. So that's the kind of play we have.
Gabuev. Thank you, Ambassador Saran. That has been very informative. I learned a lot. And I will remind everybody to hit the subscribe button on whatever platform you're using to receive your podcast. Unless something big and positive happens in the peace negotiations, our show will be back in your playlist early next year. Thank you and stay safe.
Saran. Thank you, Sasha, for having me. Thank you very much. Thank you.
