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21 May, 2024 14:14

India-Russia trade deficit widens eightfold as crude imports surge

New Delhi has imported oil worth over $46bn during the 2024 fiscal – an all-time high
India-Russia trade deficit widens eightfold as crude imports surge

New Delhi’s trade deficit with Moscow has increased by 33% to over $57 billion in the 2023-24 financial year, Mint reported on Monday, citing India’s Commerce Ministry’s data. The trade deficit has grown eightfold since 2021-22, when India started ramping up oil purchases from Russia, while its exports during the same period increased by about 32%.

During last fiscal (India’s financial year is April 1 to March 31), the South Asian nation’s imports from Russia have increased by 33% to $61.4 billion, largely on the back of crude oil purchases. Indian exports to Russia stood at $4.2 billion, up by 35% and driven mainly by pharmaceutical products, telecom instruments, metals, and machinery.

New Delhi has significantly ramped up the purchase of Russian crude oil since the beginning of the hostilities with Ukraine, despite constant scrutiny from the West.

During the 2024 fiscal, India imported crude oil worth $46.5 billion from Russia, up from $31 billion in the previous period.

In April, Indian imports of Russian crude oil jumped to a nine-month high of 1.96 million barrels per day (bpd), according to analysts at Kpler cited by Indian Express. Russia accounted for 40.3% of India’s total crude oil imports that month, recovering from a decline to around 33% in the previous four months.

The country’s leadership has repeatedly defended its decision to buy Russian oil despite criticism from its Western partners, claiming it arose from “pragmatism” and historically robust ties with Moscow. Subrahmanyam Jaishankar, Foreign Minister of India, has claimed that the purchases of Russian oil have helped “stabilize” the international energy market and to control inflation in the country.

Both Indian and Russian officials have cited the large trade deficit a serious issue that the countries are aiming to resolve by diversifying trade, particularly because Moscow and New Delhi are increasingly relying on settlement in national currencies. Notably, India’s trade deficit with Russia has increased eightfold between the 2021-22 financial year and 2023-24.

Indian industry heads are also mulling ways to increase exports to Russia. Earlier this year, Ajay Sahai, the head of the Federation of Indian Export Organisations (FIEO), told RT that many Indian companies, including small and medium enterprises, are looking to Russia in “a big way.” According to Sahai, bilateral trade has witnessed massive growth in new areas such as iron, machinery, electronics, chemicals, ceramics, and agriculture in recent years.

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