InvestorQ : Is it true that India is slowly reducing its support for Russia and why do you think it is happening?
Katherine Gonsalves made post

Is it true that India is slowly reducing its support for Russia and why do you think it is happening?

rhea Babu answered.
1 month ago

There is a silent shift happening in the way India has been thinking and strategizing about its support for Russia and this could have long term implications. Remember that from December 2022, the EU region will impose much heavier and stringent sanctions on Russia with respect to oil and gas sourcing. Russia put pressure by cutting supplies through the Nord Stream 2 pipeline, but it had little eventual impact. While India started as a die-hard supporter of Russia, that is gradually changing as India is taking a more pragmatic view of the whole thing. Let us look at how India supported Russia in the first place and how it changed recently.

Despite tremendous global pressures, India refused to condemn the Russian aggression in Ukraine calling for more of negotiations and talks. At the United Nations General Assembly (UNGA), India abstained from voting on the Russia resolution and did the same in the United Nations Security Council (UNSC) also. In addition, India was also absorbing oil from Russia. Things are not the same anymore. For instance, at Samarkand, Uzbekistan, during the SCO meeting, Modi told Putin that war was not a solution in this situation. India also voted against Putin’s request for a secret ballot on Ukraine. Finally, India is once again diversifying its oil and is getting back to its old partners from Russia and China. Key points to note.

a) India realizes the fact that it is hard to support a country that indulges in civilian killings. Russia has annexed Ukraine territories and India is apprehensive that supporting Russia at this juncture would virtually legitimize what Pakistan has done in Kashmir.

b) For India, Russian oil is not feasible in normal conditions due to the high freight costs. Hence it behoves on India to sustain its long standing relationships with the Middle East and Africa build assiduously over the year for oil imports.

c) If you look at trade composition, Russia is a minor trade partner. India’s major trading partners are the US, UK, EU and China. While India runs a massive deficit with China, it is partially compensated by surpluses with the US and UK, which India cannot lose.

d) Then there is the pressure on corporates. Corporates importing oil from Russia struggle to get finance or letters of credit opened in their favour. This is more so if the subject matter is Russian oil.

e) Most Indian companies are also wary that they may invite corporate level sanctions from the US, UK and EU if they continue to trade with Russia. There is already pressure from the US and European clients and banks, where they find a Russian content to a deal.

But the most important point here is the role of China. One concern for India is that if the December sanctions corners Putin, Russia, may gravitate closer to China. In recent times, India has never shared the best of relationships with China and the clashes between the two armies at Galwan and Pangong Lake are examples. India is also not too pleased with China’s proximity to Pakistan. If Russia becomes dependent on China, India cannot count on Russia to take their side when there is a conflict with China. Keeping support of the West intact is a major necessity for India.