Syllabus: GS-II: Bilateral Relation

Why in the News?

• India’s crude oil imports from Russia surged in September 2025, with provisional vessel-tracking data showing about 1.73 million barrels per day (bpd) in the first 16 days of the month.

Present — Key Facts

• 1.73 million bpd of Russian crude imported in the first half of September, above July and August levels (around 1.59–1.66 million bpd).
• Jamnagar refinery complex alone imported nearly 18.3 million tonnes of Russian crude in January–July 2025.
• Refinery outages in Russia and shifting supply chains have redirected flows to Asia, with India emerging as a top buyer.
• Indian refiners are adapting to sanction-related frictions through alternative payment and shipping arrangements.
• The United States has signalled possible trade penalties on countries continuing large Russian oil purchases, bringing diplomatic pressure on India.
  

Why Import Rose?

• Price Arbitrage: Russian crude is sold at a discount compared to global benchmarks, boosting Indian refinery margins.
• Refinery Capability: Indian refineries, especially large coastal ones, are configured to process heavier Russian grades effectively.
• Geopolitical Realignment: Western sanctions redirected Russian oil flows towards Asia, making India a key destination.
• Energy Security Needs: India prioritises affordable, reliable feedstock to meet domestic fuel demand and economic growth.

Geopolitical & Economic Implications

• Diplomatic Friction: India’s sustained purchases have drawn pressure from the U.S. and Europe, testing ties with strategic partners.
• Sanction Challenges: Payment systems, shipping insurance, and secondary sanctions pose risks to import continuity.
• Economic Gains: Cheaper crude supports lower input costs, boosts refining margins, and benefits downstream industries like petrochemicals and tyres.
• Strategic Risk: Over-dependence on a single supplier raises long-term vulnerability.

Risks & Challenges

• Logistics and Insurance Issues: Possible disruption of shipments if insurers/shipowners exit Russian crude markets.
• Secondary Sanctions: Potential penalties or tariffs on Indian trade if geopolitical tensions escalate.
• Refinery Mismatch: Not all refineries can handle certain Russian blends; blending adjustments may be needed.

Way Forward

• Diversify Suppliers: Strengthen energy security by sourcing from multiple regions and expanding Strategic Petroleum Reserves (SPR).
• Diplomatic Balancing: Maintain engagement with the U.S. and EU while defending India’s sovereign energy choices.
• Insurance & Payment Resilience: Develop alternative insurance pools and state-backed payment systems to reduce sanctions exposure.
• Refinery Upgrades: Encourage investment in refining flexibility and downstream petrochemical capacity.
• Transparent Communication: Publish clear data on oil sourcing and prepare contingency plans for possible disruptions.
  

Key Takeaways

• 1.73 million bpd – India’s Russian oil imports in the first half of September 2025.
• Jamnagar refinery is among the largest global buyers of Russian crude.
• India faces economic benefits from discounted crude but also diplomatic risks from sanctions pressure.

India–Russia Relations 

• Historical Background

• • Diplomatic ties established in 1947, deepened with the Indo–Soviet Treaty of Peace, Friendship and Cooperation (1971).
  • Russia has traditionally been India’s major defence partner, supplying over 60–70% of India’s defence equipment historically.
  • The partnership has been described as a “Special and Privileged Strategic Partnership” since 2000.
• Key Dimensions
  • Defence & Security
    • Major arms supplier: S-400 missile systems, nuclear submarines, aircraft, tanks.
    • Joint ventures: BrahMos missile project.
    • Defence cooperation has, however, seen challenges as India diversifies supplies (e.g., U.S., France, Israel).
  • Energy & Nuclear Cooperation
    • Russia involved in the Kudankulam Nuclear Power Plant.
    • Long-term energy ties: Oil, natural gas, nuclear fuel supply.
    • Post-2022, Russia became India’s largest crude oil supplier, with discounted purchases.
  • Economic & Trade
    • Bilateral trade crossed $65 billion in FY 2024–25, largely due to oil imports.
    • India exports pharma, machinery, chemicals, and imports crude, defence tech, and fertilizers.
    • Goal: Reach $100 billion trade by 2030.
  • Multilateral Cooperation
    • Partners in BRICS, SCO, G20, UN forums.
    • Common positions on multipolarity, reform of global institutions.
  • People-to-People & Cultural Ties
    • Deep cultural exchange since Soviet times in literature, cinema, education.
    • Indian students in Russia, especially in medical studies.

Challenges in Relations

• Geopolitical shifts: Russia–China closeness, U.S.–India strategic convergence.
• Sanctions pressure on trade and energy payments.
• Logistical issues in oil trade: insurance, shipping, currency settlements.
• Defence diversification reduces Russia’s monopoly as a supplier.

Strategic Significance

• Russia remains crucial for India’s energy security and defence technology.
• Partnership supports India’s pursuit of a multipolar world order.
• Despite challenges, Russia continues to be a pillar of India’s foreign policy calculus.
  

Q. India’s rising imports of Russian crude oil provide economic gains but also pose diplomatic and strategic challenges. Discuss. How should India balance its short-term energy security needs with long-term geopolitical and sustainability considerations? (250 words / 15 marks)