India-Russia Trade Surges to $68.7 Billion Amid Geopolitical Tensions and U.S. Tariffs

Russian President Vladimir Putin Arrives in New Delhi for State Visit

Russian President Vladimir Putin arrived in New Delhi on Thursday for a two-day state visit, marking his first trip to India since Russia's invasion of Ukraine in 2022. The visit aims to deepen economic and strategic ties between the two countries, with a focus on expanding bilateral trade and defense cooperation. Prime Minister Narendra Modi welcomed Putin at the airport, defying U.S. pressure over New Delhi's continued purchases of Russian oil.

Trade between India and Russia has surged from $8.73 billion in FY22 to $68.7 billion in FY25, driven largely by Indian imports of discounted Russian crude. However, the trade remains heavily skewed in favor of Russia, with India's exports to Moscow growing only marginally to $4.88 billion during the same period. The widening trade deficit has prompted Indian officials to push for a more balanced economic relationship.

During the 23rd India-Russia Annual Summit on Friday, Modi and Putin are expected to finalize agreements on expanding India's exports of pharmaceuticals, agricultural goods, and marine products. The two leaders also plan to address challenges posed by U.S. sanctions and tariffs, which have impacted Indian companies importing Russian oil. Additionally, the summit will cover cooperation in energy, defense, and the migration of Indian professionals to Russia according to reports.

A Strategic Economic Partnership Amid Global Pressure

India and Russia have set an ambitious target to increase bilateral trade to $100 billion by 2030. Commerce Minister Piyush Goyal emphasized the need to diversify the trade basket to reduce the imbalance, highlighting potential sectors such as consumer goods, electronics, and automobiles. The Russian side has also shown interest in increasing imports from India, with plans to organize a forum of importers during Putin's visit to explore ways to boost demand for Indian goods according to the Russian president's spokesperson.

The economic partnership is unfolding against a backdrop of geopolitical tensions. U.S. President Donald Trump has imposed 50% tariffs on Indian goods, partly in response to New Delhi's continued purchases of Russian oil, which Washington claims funds Moscow's war in Ukraine. Despite this, India has maintained its stance, emphasizing its adherence to international sanctions while pursuing its energy security interests. The U.S. has also raised concerns that India's relationship with Russia could strain ongoing trade negotiations, including a potential bilateral trade deal and a separate agreement with the European Union.

Diversifying Trade and Mitigating Risks

Indian officials are actively seeking ways to mitigate the impact of U.S. tariffs. The government has announced an export promotion mission and is engaging with the U.S. for a mutually beneficial bilateral trade agreement. Additionally, the Reserve Bank of India has introduced relief measures for affected exporters, including extended repayment periods for loans and support through the Credit Guarantee Scheme. India is also pursuing free trade agreements with countries such as Japan, South Korea, and the United Arab Emirates to diversify its trade relationships according to government sources.

The shift toward using national currencies—rupees and rubles—for trade settlements has been another key step in reducing the impact of Western sanctions. Nearly 90% of India-Russia trade now uses local currencies, according to government data. This move strengthens financial sovereignty and reduces reliance on the U.S. dollar, which has become increasingly problematic amid geopolitical tensions.

Looking Ahead: Defense, Energy, and Global Stability

Defense cooperation remains a cornerstone of the India-Russia relationship. The two countries are expected to finalize a deal for India to lease a nuclear-powered submarine from Russia, as well as agreements to upgrade India's Su-30MKI fighter jets and accelerate the delivery of S-400 missile systems. The war in Ukraine has caused delays in some deliveries due to supply chain disruptions, but both sides are committed to strengthening their defense partnership according to defense officials.

Energy remains a critical component of the relationship. India has emerged as the second-largest importer of Russian crude oil after China, helping Moscow maintain a steady revenue stream despite Western sanctions. However, the U.S. has tightened its stance, sanctioning Russian oil producers and pressuring India to reduce its purchases. Indian officials, however, have reiterated their commitment to maintaining a stable relationship with Russia while managing trade tensions with the West according to government statements.

The India-Russia partnership has historical roots, dating back to the 1955 Indo-Soviet Treaty. As both countries navigate a complex global landscape, their leaders are focused on strengthening economic and strategic ties. The upcoming agreements and initiatives are expected to reinforce India's position as a key player in global energy and defense markets, while also demonstrating its strategic autonomy in an era of shifting alliances according to diplomatic sources.