Yves here. John Helmer explores the endeavor of Putin and Modi to fortify their partnership in response to US pressures. However, the article reveals the significant economic challenges in achieving this goal. Currently, a substantial trade deficit exists between Russia and India. According to the Indian Embassy in Moscow:
Bilateral Trade Figures
- Bilateral trade between India and Russia soared to a record USD 68.7 billion in FY 2024-25, marking a remarkable increase of nearly 5.8 times over the pre-pandemic trade figure of USD 10.1 billion.
- This total consists of India’s exports valued at USD 4.88 billion, while imports from Russia reached USD 63.84 billion.
The heavily skewed trade balance favors Russia, leading to discontent over the accumulation of rupees that Russia finds difficult to utilize.
Helmer highlights aspirations from both nations to elevate their bilateral trade to USD 100 billion. However, this ambition is complicated by India’s plans to reduce imports of Russian oil, not necessarily due to US sanctions, but rather a desire for diversified energy sources. With the EU pursuing a full exit from Russian energy, opportunities might arise for India to process Russian oil for the European market.
The challenging aspect to comprehend is the typical economic dynamic where a country with a trade surplus invests in its trade deficit partner. Foreign direct investment (FDI) often serves as the most stable form of capital infusion. Yet, many nations are hesitant due to concerns about foreign control and political influence. Surprisingly, Indian interests seem to favor increased Russian investment in domestic manufacturing; however, Russian companies have shown little commitment.
By John Helmer, a seasoned foreign correspondent in Russia, known for his independent bureau and expertise in political science and advisory roles across several nations. Originally published at Dances with Bears
A state visit rarely combines national pride with humor while poking fun at a common adversary, such as President Donald Trump. This Indian cartoon, featured prominently during last week’s meetings between President Vladimir Putin and Prime Minister Narendra Modi, encapsulates that sentiment. The accompanying video is gaining traction in both India and Russia.
The cartoon parodies a well-known song from the classic Hindi comedy Sholay, which holds a special place in Indian cinema. The recent passing of its star, Dharmendra, further heightens emotional resonance, contrasting starkly with the historical depiction of the “Ugly American” defeated with Russian assistance in Vietnam, now revived in the form of Trump, portrayed humorously in the animation.
In the video, Modi and Putin harmonize about their enduring friendship while refueling their motorcycle with Russian petrol, snubbing a US gas pump and leaving Trump in a vexed state as they speed away, proclaiming, “We will take on the world.” This serves as a clear message to Trump and his officials, whose tariffs and insults have strained public opinion in India. “We will continue our dealings,” they sing, reaffirming that their friendship will weather the challenges ahead.
During an official reception, Modi expressed to Putin: “We have maintained close communication following the Ukraine crisis. As a true friend, you have kept us informed. This trust is invaluable.” He emphasized that India aligns with peace, not neutrality, amidst ongoing global tensions.
In another speech, Modi drew parallels between Russia’s conflict with the US and NATO and India’s own battles against terrorism, stating, “India and Russia have always stood shoulder to shoulder in the fight against terrorism.” He condemned recent terrorist attacks as a direct assault on human values, highlighting the need for unity against such threats.
Putin subtly referenced the sanctions imposed by the US, noting that both countries have developed resilient financial channels. He affirmed Russia’s role as a reliable energy supplier and expressed readiness to ensure uninterrupted fuel supplies to support India’s economic expansion.
While acknowledging the camaraderie between the two leaders, Indian and Russian insiders admit that transforming this positive spirit into tangible trade figures remains a challenge. During discussions, Putin recognized the “clear potential” to reach USD 100 billion in trade but conceded that growth had stagnated between 2023 and 2024 at around USD 64-65 billion. With India’s imports last year officially at USD 63.8 billion, this year may see a decline in trade volume.
Although optimism permeates the dialogue, Indian officials and analysts are candid about the realities of reaching the USD 100 billion trade goal. Recent US sanctions are expected to lead to a significant reduction in India’s Russian oil imports, impacting overall bilateral trade in the short term. The path forward necessitates building a more sustainable trading relationship beyond oil.
An Indian representative in Moscow highlighted that while Russia aims to increase oil sales, such short-term strategies lack long-term sustainability. Although India remains interested in Russian high-tech defense equipment due to greater trust compared to US and French offerings, Russian businesses have been reluctant to invest in India without adequate protections or partnerships.
Some Russian banks, including Sberbank and VTB, have expressed intentions to establish a presence in India, demonstrating an effort to build necessary financial channels shielded from US sanctions. However, a Delhi financial expert cautioned against treating these developments as significant, likening them to mere ‘baby steps’ in what should be bold strides towards deeper collaboration.
For India to boost exports within the Russian market, it requires substantial Russian investments in Indian manufacturing, establishing a model similar to US foreign direct investment (FDI) setups. Presently, a significant proportion of FDI in India flows from Indian oligarchs through offshore havens, leading to reluctance in competing with new Russian entrants. Russian oligarchs, in turn, exhibit wariness regarding investments in India without state backing.
Turning attention to trade dynamics, the statistics reveal that outside the minor surge in crude oil imports spurred by discounted pricing, trade volume would be markedly lower and more balanced without such dependency on Russian oil. In 2024, India’s largest import sources revealed China at 18.5%, with Russia following significantly behind at 10.2%.
As far as Indian exports are concerned, Russian demand constituted just 1.1% of the total, while the US leads at 18.3%, a vulnerability that the Trump administration has actively exploited through tariffs.
THE INDIA-RUSSIA TRADE IMBALANCE AND THE RUSSIAN CRUDE OIL FACTOR
The obscured figure in the EU chart for Indian exports stands at 17.8%. Click for a larger view and additional analysis: https://thewire.in/trade/the-economic-reality-of-india-russias-100-billion-ambition
Data indicates that the surge in Indian crude oil imports was a tactical response to price discounts rather than indicative of a strategic pivot by the Modi government. Officials report a consistent effort to reduce reliance on Russian oil prior to the imposing of additional tariffs by the US.
Despite US tariffs impacting the economic landscape, the Indian government had been proactively seeking to diversify oil imports. “While these tariffs are a consideration, they are not the main driver of India’s policies,” an official emphasized.
The decrease in Russian oil imports has impacted both absolute volumes and the share within total oil imports, reflecting a significant drop off from the previous peak.
Source: Indian Ministry of Commerce & Industry -- note: Data for 2025-26 covers the April-September 2025 period
Consequently, Putin’s assurances of uninterrupted fuel supplies to aid India’s economic growth appear less persuasive to Modi, indicating that multiple factors influence India’s oil strategies beyond external pressures.
To reach the desired USD 100 billion trade target, the focus must shift toward Russian exports in military technology, nuclear resources, joint ventures in pharmaceuticals, fertilizers, and critical minerals. Experts are now questioning whether there is sufficient Russian consumer demand to match American demand for top Indian exports.
THE US-INDIA COMMODITY TRADE MODEL – CAN RUSSIA APPROACH OR REPLACE IT?
Source: https://www.india-briefing.com/news/india-us-trade-data-state-wise-2025-40790.html/
A Moscow insider remarked that while Putin may be sincere, Russian oligarchs show little interest in India as a market or manufacturing partner. For any meaningful investments, Modi must convince Putin to direct Russian capital towards India.
Contradicting sentiments emerged from Delhi sources, noting that the recent encounters involved inconsequential traders; however, others highlighted attendance by significant figures from Russian banking and industry, suggesting some potential for deeper engagement.
Despite differing perspectives, some Russian oligarchs reportedly wish to return to Western markets once sanctions are lifted, complicating their current engagement with India.
FOREIGN DIRECT INVESTMENT (FDI) IN INDIA BY COUNTRY SOURCE, VOLUME, YEAR – TOP-TEN TABLE SUMMARIES SHOW RUSSIA TRAILING
Source: https://www.dpiit.gov.in/static/uploads/2025/07/03ad41d0e0c3deb434e0520f5dda6df3.pdf
The conclusions from the 70-point Joint Statement that followed their discussions reveal a military-focused agenda, emphasizing India’s need to procure while Russia aims to sell. Ongoing negotiations for advanced defense technologies like the Su-57 aircraft and S-500 missile systems have yet to yield definitive outcomes amidst competitive global bidding.
Prior to Putin’s arrival, a briefing for the Indian media was conducted, where Peskov was questioned about Russian neutrality in a potential conflict between India and China. He assured that both relationships with India and China are mutually respected and acknowledged India as a “privileged strategic partner.”
Source: https://www.youtube.com/watch?v=jfRdHV_wr5M – Min 22-24:43.
Indian skepticism remains about Russia’s commitments regarding support to counter terrorist threats from Pakistan. The Joint Statement clarified that both leaders strongly condemned terrorism in all its forms, insisting on coordinated actions against terrorist groups.
Concerns voiced by Chinese analysts regarding the expanding Russo-Indian military alliance indicate that it may be perceived as a strategic move against China. This worry is exacerbated by the potential for renewed tensions along the contentious Himalayan border.
In light of these complexities, the future of India-Russia relations hinges upon successfully navigating economic ambitions while addressing broader geopolitical issues. Enhanced collaboration must expand beyond military cooperation to include sustainable economic partnerships conducive to mutual growth.
Overall, while opportunities for collaboration exist, both nations need to confront the realities of market dynamics and strategic positioning in the face of global pressures.
