India looks to enhance her foreign policy autonomy through India-Russia FTA talk
2 min read . Updated: 19 Apr 2023, 02:46 PM IST
Premium- India is now the second biggest purchaser of Russian crude oil (as of March 2022), and was also the largest importer of US crude oil in 2021.
India and Russia are in talks about a potential free trade agreement (FTA) amidst the current geopolitical tensions, aiming to strengthen the bilateral relationship that has thrived since the start of the Russia-Ukraine conflict.
The announcement of FTA talks with Russia comes at a time when New Delhi is also engaged in discussions with Britain, the European Union and the Gulf Cooperation Council about FTA.
Speaking with Livemint, Swarup Gupta, financial services lead and head ESG rating service, at Economist Intelligence Unit (EIU) said that with Russia displacing Iraq as its top supplier of crude oil, India will be intent on narrowing its trade deficit with Russia.
In recent years, India has employed economic diplomacy to establish a favourable position for itself in global oil geopolitics. It is to be further noted that as per ORF, India is now the second biggest purchaser of Russian crude oil (as of March 2022), and was also the largest importer of US crude oil in 2021.
It is to be further noted that Indian consumers pay 20 per cent more for oil than Americans, whose per capita income is 30 times greater, India's priority is to obtain the most advantageous deals.
Gupta further stressed that the India-Russia FTP, if concluded, would indicate that India is intent on pursuing an independent foreign policy and will continue to support Russia even as the war in Ukraine drags on.
Meanwhile, Indian Foreign Minister S. Jaishankar noted that the COVID pandemic had disrupted discussions on an FTA between India and the Russian-led Eurasian Economic Union and that he stressed “Our colleagues will pick up on this because we do believe it will make a real difference to our trade relationship".
Recently, Dmitry Shugayev, who leads Russia's Federal Service for Military-Technical Cooperation noted that India is still the largest purchaser of Russian arms globally, comprising 20% of the country's $15 billion yearly exports.
Gupta hoped that If India's new FTP programmes avoid massive incentives to exporters, it could have a secondary effect on inflation by reducing government spending and preventing distortion in the pricing of exported items. “An Indo-Russia FTP would also indicate that India will continue to pursue its ambition of leading the global south on key issues, including climate finance and geopolitical risks.," he further added.
According to media reports, over the past five years, India has imported military goods worth $13 billion and has made orders for Russian military equipment and weaponry amounting to $10 billion. “India will be keen to step up its exports of heavy machinery and related items to Russia as the country struggles to keep core sectors running during the conflict with Ukraine."