External Affairs Minister S. Jaishankar on Monday urged for urgent steps to reduce the growing trade deficit between India and Russia, which has become a significant concern. Speaking at the India-Russia Business Forum in Mumbai, Jaishankar highlighted the widening imbalance, where India’s exports to Russia were just USD 2.24 billion in the first five months of the fiscal year, while imports surged to USD 27.35 billion, primarily driven by crude oil purchases. This has resulted in a trade deficit of USD 25.11 billion.
Jaishankar noted that Russia had become India’s largest supplier of crude oil, following discounted prices due to European nations reducing their imports of Russian oil after the 2022 invasion of Ukraine. He emphasized the need for corrective measures, stating, “The balance of trade needs urgent redressal since it is so one-sided.”
He called for the removal of non-tariff barriers and regulatory hurdles that have hindered trade expansion, stressing that these issues must be addressed swiftly for the trade relationship to become more balanced. “It is imperative that non-tariff barriers and regulatory impediments are speedily addressed,” he added.
While the current bilateral trade between India and Russia stands at USD 66 billion, Jaishankar expressed confidence that the target of reaching USD 100 billion was “more than realistic.” He also suggested exploring the use of national currencies for trade settlements, particularly in light of the ongoing global uncertainties. “Special Rupee Vostro Accounts are right now an effective mechanism, but even in the short run, a better trade balance with national currency settlements is the answer,” he said.
Jaishankar also highlighted the strategic importance of the partnerships between India and Russia, particularly in sectors like energy, technology, and natural resources. He pointed out that both nations have significant growth potential, with India enjoying a robust 8% growth rate and Russia being a key provider of natural resources.
He further emphasized the need for continued attention on connectivity initiatives like the International North-South Transport Corridor, the Chennai-Vladivostok Corridor, and the Northern Maritime Route, which are critical for facilitating smoother trade between the two countries.
On broader economic cooperation, Jaishankar noted that India and Russia could collaborate to address challenges like demographic imbalances and the shifting global workforce model. He also underscored the importance of strengthening cultural and educational ties, citing sectors like education and film as vital areas for further engagement.
Russian Deputy Prime Minister Denis Manturov, who was present at the event, along with several Indian business leaders, including Mahindra’s Anish Shah, supported these initiatives aimed at fostering deeper economic and strategic ties between the two nations.
