Modi-Putin Bromance: A Saga Of Oil, Armaments, Trade Routes, And The China Factor

Modi’s visit was of course planned months in advance and his aides could not have had any inkling of the events that coincided with it, and it was really all about four core issues - India’s growing and strategic trade in oil with Russia, its continued, though reduced reliance on import of Russian armaments, strategic trade corridors and a bid to wean Russia away from a Sino-Pak axis that is forming.    

The meetings spread over Tuesday and Wednesday were also a display of Modi’s “strategic independence” from his Western allies, on whom he has strongly depended during his first two terms in office for trade and support against an expanding Chinese footprint in the Indo-Pacific.

With the visit raising some murmurs of an increasing alignment between Modi’s India and Putin’s Russia on strategic matters, the Indian Prime Minister’s statement at the meeting was also used to underline the nation’s sympathy for human rights in Ukraine. “When innocent children are killed, when we see innocent children dying, then the heart pains. And that pain is very horrible,” Modi said.

While Modi’s acknowledgment of Ukraine’s civilian devastation by Russia must have brought in a measure of relief to his friends in Europe and the US, it is unlikely to have gone down too well with Kremlin’s strongman Putin, especially given his overwhelming need for support from the outside world. 

However, necessity can override many a pinprick and this obviously coaxed Vladimir to drive Narendra around his dacha in a new electric car, symbolising the long-standing relationship between the two countries that stretches back to the days of the Cold War.

Big Oil Friendship 

Russia’s invasion of Ukraine and the quick-to-follow sanctions on Moscow by the Western world may have dealt a body-blow to many trading arrangements with numerous countries, but that event also saw the coming nearer of the Kremlin and South Bloc, home to India’s Ministry of External Affairs, aided by ‘Big Oil’.

In 2021-22, trade between India and Russia accounted for a mere 1.3 per cent of the former’s overall commerce. Tellingly, by 2023-24, Russia was India’s third-largest source of imports, next only to China and the European Union. With the West boycotting Russian oil, India’s crude imports from Russian ports jumped more than 10-fold, from just US$ 5.25 billion 2021-22 to a whopping US$54.51 billion in 2023-24. 

As Russia offered average discounts of 9 per cent compared to the second-cheapest source, Iraq, Indian buyers homed in on Moscow, and Calendar year 2023 saw 30 per cent of India’s crude imports coming from that country.

The discounted oil helped India balance its trade books, especially as benchmark Brent crude prices surged from US$ 54 a barrel in January 2021 to nearly US$125 a barrel in June 2022, settling to a more reasonable but still steep US$ 86.68 on July 10 this year.

It also helped India’s big refineries on the country’s west coast – including those owned by Reliance Group – make huge profits by refining the oil and selling it to Europe and other geographies. India’s exports of petroleum products jumped from 25.23 per cent of the country’s total exports in 2020-21, valued at US $99.70 billion to US$219.94 billion, or 32.6 per cent of total exports.

Rotterdam became the top destination for India-refined petroleum products for further supply throughout Europe, with US $14.29 billion of diesel, gasoline and jet fuel shipped through the Netherlands alone in 2023-24. Indian exports of diesel and jet fuel to the Netherlands jumped 1,152.5 per cent and 480.6 per cent, respectively, between 2020-21 and 2023-24, according to analysts.

The trade in oil, combined with Russia’s growing war economy, also helped Putin propel his country to the fourth spot in GDP terms internationally in 2023, ahead of European rival Germany and Japan. This put Putin in quite a sweet spot, and some of that sweetness rubbed off on India, which ascended in the Kremlin’s pecking order of relationships after years of ambivalence, an era when New Delhi had drawn closer to Washington and sourced much of its arms imports from the West.

If there is one sore spot in the India-Russia ‘trade arrangement’, it is that Indian exports have not grown and remain woefully behind its imports from the Eurasian giant. Modi has tried to address this gnawing gap in his meetings with Putin, particularly as India’s exports to Russia have consistently been less than 1 per cent of its total exports between 2020 and 2024. 

Arms Win Over Diplomacy

Following the 1965 War between India and Pakistan, when the two belligerents were summoned to Tashkent and India forced to give up its spoils of war – huge swathes of territory in Sindh, Punjab and the strategic Haji Pir Pass  – the Americans and British stopped selling arms to both countries as ‘token punishment for being naughty boys’.

The Russians, whose strong-arm diplomacy forced the then-Indian Prime Minister Lal Bahadur Shastri to accept peace when India was at the cusp of a decisive victory and agree to return conquered territory, were quick to step in to become India’s largest source of military weapons.

Since then, India’s armed forces have largely depended on Soviet arms, ranging from MiG and Sukhoi aircraft to T-series tanks and artillery guns. However, after India signed a defence cooperation treaty with the US in the mid-2000s, this scheme of things changed and purchases from Russia began to taper.

Nevertheless, Russia remains India’s mainstay for defense supplies and between 2019 and 2023, it remained the top buyer of Moscow’s arms. Some 34 per cent of Russian armament exports during this period went to India and 21 per cent went to its Asian rival China.

That having been said, India’s overall dependence on Russian made armaments declined as Kremiln’s share of New Dehi’s arms imports shrank from 76 per cent in 2009–13 to 36 per cent in 2019–23.  

The war in Ukraine, at a subliminal level, has also boiled down to a contest between Western arms versus Moscow’s repertoire, showcasing that even rudimentary and not-so-fancy Russian-made equipment is more effective and possibly more lethal at the ground level than the munitions churned out by factories in the West. 

India is consequently going ahead with its order for two regiments of S-400 Triumf surface-to-air missiles from Russia. New Delhi needs these types of equipment fast as China has ratcheted up both its troop deployments complete with its new ZTQ-15 light mountain tanks and missile silos, in the high Himalayas bordering India.

Strategic Trade Corridors

Both India and Russia are also anxious to establish strategic trade corridors that can diversify trade and increase integration between the two nations and vital central Asia states. The immediate trigger for activating the  North-South corridor – which will connect India’s port cities with Chabahar in Iran and from thereon (through near-Asian and Central Asian states) to St Petersburg in Russia – comes from China running a trial goods train from X’ian in its Shaanxi province to Azerbaijan via Kazakhstan.

At this week’s meeting, Modi and Putin also discussed the possibility of the “establishment of the EAEU-India Free Trade Area”, despite railway and road links through Iran and Central Asia not being fully functional. This move alone can push bilateral trade to over US $100 billion by 2030.

Apart from India, Russia and Iran, another 10 nations – Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Belarus, Oman and Syria – will be linked by the said corridor and possibly the free trade area, when it comes about.

India is also pushing for a Chennai-Vladivostok Eastern Maritime Corridor, already being used by Indian tankers to bring in gas and crude from Siberian oilfields, in which Indian firms have invested heavily. A formal corridor will increase investments in new port infrastructure along the route, further boosting trade with Vietnam, Japan, Malaysia, Thailand and Singapore, and cutting down transportation windows.

While under discussion, what has been left unsaid by both sides on this route is that it passes through the South China Sea, a zone of contention between the global community and China, which is claiming 90 per cent of that sea’s 3.5 million square kms of area.

Weaning the Bear Away

Last but not least on Modi’s list of objectives in reaching out to Putin is to ensure that the Russian bear does not join hands with the Chinese dragon against India, or be part of the Sino-Pak axis that has been created by Beijing’s investments in Gwadar Port and the highway from Xinjiang to Baluchistan.

In the past, during India’s 1965 and 1971 wars with Pakistan, China – which has a live border dispute (with India) over the McMohan line – had stayed away from intervening, primarily due to the fear of retaliation by the Soviet Union. In the 1960s, differences between the Soviet Union and China had begun, and in the autumn of 1971, India had a “treaty of peace and friendship” in place. 

Though it would be far-fetched to expect Russia – which is beset with its own mounting set of troubles – to intervene in case of a Chinese incursion into Indian territory, strategists in New Delhi would obviously sleep better if given an assurance that Moscow will not overtly or covertly aid the Chinese in their beef with India.

The South Bloc’s final nightmare would be that of Russia, which has increased arms exports to and military exchanges with Pakistan, joining the growing Beijing-Islamabad axis.

As American author Mark Frost said: “Keep your friends close, and your enemies dead and buried in the basement.”