Russia is in the process of negotiating a free trade agreement with India to replace some of the products and investments prohibited by sanctions imposed after the outbreak of the Ukraine conflict. Russia is currently India’s largest oil supplier, and India has access to undervalued Russian crude oil.
Russia and India negotiate new trade agreement
Russia and India are negotiating a new free trade agreement (FTA) to expand trade integration between the two countries, which flourished after the establishment of Western sanctions against Russia. According toReutersIndia’s Foreign Minister Subrahmanyam Jaishankar also said the deal is at the “advanced agreement” stage, which could secure investment between the two countries.
Currently, Russia, India’s largest energy supplier, is seeking to substitute throttled imports with products of Indian origin. In this regard, Russian Trade and Industry Minister Denis Manturov stated:
We need to find a niche for products that India can substitute. Private projects require the same broad cooperation as before the sanctions.
India-Russia ties strengthened
India has not condemned Putin’s actions and has remained publicly neutral on the issue, so cooperation between the two countries has not been affected by the Russian-Ukrainian conflict. Therefore, the recentadoptionof the Dubai benchmark, in deference
to the Eurocentric Brent benchmark, has allowed us to take advantage
of undervalued crude oil being sold.
Meanwhile, India is trying to bring balance to its trade balance: in December, the Indian government sent a list of products that are competitive in the Russian market to obtain permission to export to that country.
Once the FTA between the two countries is completed, depending on its finalization, the introduction of foreign products in both markets will be simplified. Russia is also finalizing another bilateral trade agreement with Iran, which also faces a broad US-based sanctions package, in order to increase the level of integration and trade between the two countries without being limited by foreign decisions.
The dangers of excessive use of the U.S. dollar as a weapon to establish sanctions have recently been acknowledged by U.S. Treasury Secretary Yellen, who stated that countries facing such sanctions would be determined to find alternative means.
What do you think of the new trade agreement currently being signed by Russia and India?