The China Factor in India’s Blooming Relationship With Russia


https://thediplomat.com/2024/07/the-china-factor-in-indias-blooming...


None of this is explicitly anti-China, but Russia is taking clear steps to reduce its dependence on Beijing, economically, and politically.

India and China’s economic and territorial disputes cannot be solved by Russia; Russia no longer has that level of influence. The Modi-Putin agreements, while not comparable to the scale of Sino-Russian trade, or India’s trade with the West, drive home two critical points. The first is the success of Modi’s multiple alliances. India has been able to diversify its partners, suppliers, and buyers effectively, addressing Modi’s domestic goals.

The second point is just how much of this does not align with China’s hopes. Moscow’s disquiet regarding its dependence on Beijing is real. Looking ahead, while Modi may gain a foot in the door of the Kremlin, from which he could address Russia’s war, this is not likely. The true impact of this growing relationship is on Russia’s strategic autonomy from China.

Although not unaffected by the mood and money from Beijing, Russia has shown an ability and a desire to work with a state – India – that is not on China’s side. This might be driven by desperation, but there are inevitably strategic intentions too. Russia has committed to economic and political integration with India. This will harm China’s broader ambitions such as the marginalization of the dollar and the use of the yuan in the region.

Similarly, India will now appear as a closer partner to Russia, meaning the West might try more concertedly to work through New Delhi to reach Moscow, rather than Beijing. This also implies that the West will not penalize India for its involvement with Russia. That would be counterproductive, as the West gains from having a closely aligned and integrated partner with access to the Kremlin.

Modi’s trip represents a bubbling under the surface of the Sino-Russian partnership. As time goes on, and issues between India and China arise, it will be important to look to Russia and how Moscow responds.

There is no telling what might change between Moscow and Beijing as India steps evermore into the orbit of their partnership. However, one thing is apparent: it will likely not be what Beijing wants.

Exclusive: Russia's Sberbank says India business booming despite Western sanctions | Reuters

https://www.reuters.com/business/finance/russias-sberbank-says-indi...

MOSCOW, Sept 3 (Reuters) - Russia's trade with India is booming and bilateral payments are proceeding smoothly without the glitches that have been hampering trade with other countries, Anatoly Popov, deputy CEO of Russia's largest lender, Sberbank, told Reuters.
Sberbank handles payments for up to 70% of all Russian exports to India. Russia's trade with India nearly doubled to $65 billion in 2023, with the country becoming a major importer of Russian oil after Western sanctions imposed in 2022 over a conflict in Ukraine.

----

Sberbank is under Western sanctions and therefore cannot make transactions in U.S. dollars and euros or use the SWIFT system for international transfers. However, Popov said the bank has not experienced any problems in India.
"Sberbank is a full participant in all Indian payment and interbank systems. There are no restrictions on its operations," Popov said. India has not joined any anti-Russian sanctions and maintains friendly relations with Russia, a fellow member of the BRICS group of emerging economies.

----------

"The problem has been solved, there is no rupee surplus any longer," Popov said, emphasising that to achieve balanced trade, India still needs to increase its exports to Russia 10-fold. An Indian source told Reuters on Aug. 14 that the rupees surplus has dropped to a "few million dollars".
He said that India, the world's fifth largest economy, had almost everything Russian importers were looking for.

"India is a self-sufficient, vast economy capable of meeting its own needs. Therefore, any goods that Russia previously imported can be purchased in India," Popov said.
Sberbank is also developing its offering of hedging instruments, which already includes forwards and options, as well as other products such as rupee-denominated loans for Russian companies at rates significantly lower than in Russia.
He thanked Indian regulators for the opportunity to operate through rupee-denominated "vostro" accounts, which domestic banks can hold on behalf of foreign banks in India, facilitating their operations.
Popov said that the current mechanism of converting roubles and rupees was functioning well and did not require any third-party currencies for settlement. However, he emphasized that stock exchange trade in rupees would increase transparency.

----------------------------------

Indian reliance on Chinese imports is challenge for U.S. trade strategy - The Washington Post

https://www.washingtonpost.com/world/2024/09/02/india-china-manufac...

NEW DELHI — American businesses looking to reduce their reliance on China have increasingly been eyeing India in the past few years as a new manufacturing hub — and as a hedge against potential disruptions in Chinese supply chains caused by rising geopolitical tensions or another pandemic.

But as India has amped up its production of goods like smartphones, solar panels and medicine, the Indian economy itself has become even more dependent on Chinese imports, in particular for the components that go into these products, according to trade figures and economic analysts.

This dynamic serves as a reality check for U.S. policymakers, who have been urgently promoting efforts to diversify supply chains away from Chinese factories and “de-risk” the commercial relationship with China.

“Unless China stops being the third party from where components come in and we just assemble, that de-risking is not going to happen for any country coming in and producing in India,” said Sriparna Pathak, an associate professor at Jindal University focusing on India-China relations.

The most recent data means almost a fifth of the sensitive technology that goes into Russia’s military-industrial complex got there via India, the officials said.

A key driver of the shift is the vast stock of rupees Russia has accumulated from oil sales, according to the officials.

India’s role as a transshipment point has made it a focus for European Union and US sanctions agencies in recent months. Officials from those nations have visited several times in efforts to get authorities to crack down on shipments, and several Indian firms have come under western sanctions.


https://www.livemint.com/economy/india-is-now-russia-s-no-2-supplie...

India has surged to become the second-biggest supplier of restricted critical technologies to Russia, US and European officials said, highlighting the challenge in efforts to choke off exports fueling President Vladimir Putin’s war machine.

Indian exports of restricted items such as microchips, circuits and machine tools surpassed $60 million in both April and May, about double from earlier months this year, and leaped to $95 million in July, according to the officials, who asked not to be identified discussing private assessments. India is exceeded only by China.

Even more frustrating to Ukraine’s allies, some of them said, is that envoys who raise the issue have received little response from their Indian counterparts. India’s Ministry of External Affairs declined to comment when asked about the trend.

The most recent data means almost a fifth of the sensitive technology that goes into Russia’s military-industrial complex got there via India, the officials said.


The fresh data underscores the difficulty the US and its allies have faced in crimping Russia’s ability to fight in Ukraine two and a half years since Putin’s forces invaded. Exports of most such dual-use items directly to Russia are banned, so the country has taken to buying them from third countries — sometimes from unwitting subsidiaries of western firms or networks of intermediaries.

A State Department spokesperson said Friday that the department would reiterate rising concerns with Indian government officials as well as companies.

The US and European Union have focused most of their efforts on a list of technologies found in Russian weapons or are needed to build them.

As allies work to curb some of these routes — Turkey and the United Arab Emirates have been two big transshipment points — new hubs have emerged. They include India, Malaysia and Thailand, according to the people.

India’s role in the the shipment of such goods has presented a further challenge because US and EU policymakers want to nurture partnerships with Prime Minister Narendra Modi’s government even as he cultivates ties with Putin. India has also emerged as a top buyer of Russian oil despite allied efforts to restrict sales.

A key driver of the shift is the vast stock of rupees Russia has accumulated from such oil sales, according to the officials.
India’s role as a transshipment point has made it a focus for European Union and US sanctions agencies in recent months. Officials from those nations have visited several times in efforts to get authorities to crack down on shipments, and several Indian firms have come under western sanctions.

In July, US Deputy Treasury Secretary Wally Adeyemo wrote a letter to senior officials at the Confederation of Indian Industry warning of the sanctions risks faced by Indian companies and banks that do business with Russia’s military industrial base, according to a copy of the letter obtained by Bloomberg News.