Modi's First Bilateral Trip After Reelection is to Russia. What Does This Imply?

For his first bilateral abroad after taking office for the third time early last month, Prime Minister Narendra Modi is on a two-day visit to Russia, followed by Austria.

The 8-9 July visit will be his first to Moscow since 2015 (he visited Vladivostok for an economic forum in 2019), and thereafter, he will be in Austria from 9-10 July for the first visit by an Indian prime minister to the country in 41 years. Last month, PM Modi travelled to Italy to participate in the G7 summit.

The visit to Russia, ostensibly part of New Delhi's annual consultations with Moscow, aims to signal that India continues to value ties with Russia, even as its partnership with the United States grows. This is the 22nd annual summit between the two countries. The 21st one was held in December 2021 when President Vladimir Putin visited New Delhi. The break in summits since then has been attributed to COVID and the Ukraine war, but in reality, they reflect a certain drift in India-Russia relations.

Even so, the fact that the visit is for just 24 hours, despite a large outstanding Indo-Russian agenda, indicates that New Delhi wants to tell Washington that it is adopting a minimal approach towards Russia, focusing on India’s national interests.

Modi’s visit to Russia, the first since the Ukraine war, will allow him to get a first-hand account of how Moscow's war is faring. It may be recalled that at the SCO summit in Samarkand in September 2022, Modi had told Putin during their bilateral meeting that “today’s era is not of war.” That comment had sparked interest in a possible Indian mediation to end the war, but little has come out of it.

During the talks, Modi is likely to take up issues like the use of Indians as Russian military “helpers”. Another major subject will be India-Russia defence ties, which are undergoing some difficulties as some important Russian hardware like the S-400 missile systems and the 1135.6 frigates have been delayed. India is unlikely to acquire any new hardware because the Russians are fully preoccupied with their war in Ukraine.

India’s current interest is to ensure that Moscow regularly supplies spares and consumables needed to keep the Russian-supplied military equipment like tanks, helicopters, and fighter aircraft going.

A major subject of the talks will be trade, which has risen substantially as an unforeseen consequence of the Ukraine war. India has taken advantage of the Western embargo on Russian oil, as a result of which Indo-Russian trade is booming. Imports from Russia stood at $61.44 billion in FY24 up by 33 percent, while exports were $4.26 billion, up by 35 percent.

Crude oil imports alone accounted for some $46.49 billion, up from $31.03 billion in the previous fiscal year, registering a 49.8 percent annual rise. India’s crude imports used to be just worth $2.47 billion in 2022, which is the year the Ukraine war began.

Though Indian exports of drugs, pharma products, telecom instruments, iron and steel, marine products, machinery, etc, have increased by 32 percent, they are unable to address the widening trade deficit of $57.18 billion, which grew 33 percent in FY24.

Linked to this is the payment issue arising from the sanctions on Russian banks. In May, India suspended efforts to settle bilateral trade in rupees after intense negotiations failed to convince the Russians who believe that they could end up with an annual Rupee surplus of over $40 billion, and it would be difficult for them to deal with it. Most trade now is in US dollars. India rejected a Russian proposal to use the Chinese yuan for this purpose. In some instances, Indian traders are also settling some of the payments through third parties.

Also on the agenda will be discussions on the implementation of the Chennai-Vladivostok maritime corridor, from where India wants to source minerals. Associated with this is the progress in the International North South Transportation Corridor which the Russians have now begun to take interest in. The eastern corridor via Central Asia and the western one via the Caucasus is being viewed by Moscow as a means to pivot away from Europe to countries in southern Asia.

The ongoing Russia-China confrontation with the West is reshaping geo-economics. Blocked from Europe, Russia, with its massive trove of natural resources and technological talent, is seeking new partners in the East and the South. The Indo-Russian oil trade is only one example of the unexpected transformations that are taking place. Though Indian exports to Russia remain anaemic, there is huge potential not just there, but Central Asia as well.

Finally, just why Modi is visiting Austria is not all that clear. Considering that Vienna is on the far side of Moscow, it cannot be seen as a stopover, which is often the reason for secondary visits when prime ministers travel abroad. We can only assume that, perhaps, he has some as-yet-undisclosed diplomatic engagements in Vienna, and there is room for speculation that this has something to do with the Ukraine war.

(The writer is a Distinguished Fellow, Observer Research Foundation, New Delhi. This is an opinion article and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)