India-Russia Energy Deals Highlight Modi’s Strategic Balancing Act in Foreign Policy

Dec 17

Executive Summary

India’s strengthening economic ties with Russia underscore Prime Minister Narendra Modi’s multifaceted foreign policy, which aims to maintain relations with traditional partners like the United States while pursuing independent strategic interests. India’s recent historic energy agreement with Russia, coupled with increased bilateral trade and defense collaborations, reveals its pragmatic approach to securing resources and geopolitical autonomy. Despite pressure from Western nations to curtail ties with Moscow over the Ukraine war, India continues to prioritize affordable energy imports and military needs, while also addressing concerns about China’s growing influence.

Analysis

Energy Partnerships: The Core of India-Russia Ties

India’s latest energy deal with Russia, touted as the largest between the two nations, signals a deepening economic partnership amid geopolitical tensions. Since the Ukraine war began, India has become one of Russia’s largest oil importers, taking advantage of discounted prices to meet its growing energy demands. Russian oil now accounts for nearly 40% of India’s imports, up from less than 2% pre-2022. While rising transportation costs have prompted India to explore alternatives in the Gulf and the United States, Moscow remains a critical supplier of affordable energy.

Additionally, the new maritime route established between Russia and India has bolstered trade efficiency, reducing dependence on overland routes through China. This development further strengthens India’s leverage as it diversifies supply chains and reduces vulnerability to geopolitical disruptions.

Defense Collaboration Amid Shifting Dynamics

Russia remains a key arms supplier for India, though its dominance in this sector has waned. Between 2009 and 2023, Russia’s share of India’s arms imports dropped from 76% to 34%, reflecting India’s increasing diversification toward U.S. and European defense systems, as well as its push for domestic manufacturing. However, legacy systems from Russia still constitute the bulk of India’s military infrastructure, necessitating continued collaboration.

India’s participation in military forums like the annual Indra exercises and Russia’s ongoing role in its nuclear submarine program underscore their enduring defense ties. Yet, Russia’s growing dependence on China—India’s primary regional rival—presents challenges. Beijing’s potential influence over Moscow could pressure Russia to reassess its arms sales to New Delhi, particularly if tensions escalate in the India-China border dispute.

A Balancing Act Between Washington and Moscow

India’s relationship with Russia has drawn criticism from Western nations, particularly the U.S., which has imposed sanctions on several Indian companies tied to Russian defense deals. Washington has also expressed concern over India’s purchase of Russian S-400 air defense systems and its refusal to ban Russian state media. However, New Delhi has maintained its independent stance, emphasizing the need for affordable energy and strategic autonomy.

India’s growing relationship with the U.S. — characterized by increased arms imports, intelligence sharing, and participation in the Quad alliance — has not diminished its ties to Russia. Instead, India leverages both relationships to address its strategic priorities: countering China’s assertiveness and securing resources for its growing economy.

Economic Diversification and Strategic Sovereignty

While India and Russia’s trade relationship historically centered on defense, recent shifts highlight broader economic ties. Contracts for train carriages from a St. Petersburg firm and discussions about visa-free travel further reflect evolving bilateral priorities. However, Russia’s limited economic diversification and reduced global competitiveness pose constraints on this partnership’s long-term potential.

At the same time, India’s refusal to join Western sanctions against Russia and its willingness to mediate in the Ukraine conflict signal a commitment to maintaining strategic sovereignty. By engaging both the West and Moscow, India reinforces its position as a non-aligned power capable of pursuing its own interests.

Implications for the U.S. and Regional Dynamics

India’s deepening ties with Russia present challenges for the U.S., which seeks to counterbalance China in the Indo-Pacific with India as a key ally. Efforts to pressure New Delhi into cutting ties with Moscow could strain relations, particularly as India resists measures that undermine its sovereignty. Instead, Washington may need to accommodate India’s independent foreign policy while enhancing cooperation in areas like technology, trade, and defense.

For Russia, maintaining its partnership with India is vital as it faces increasing isolation from the West and dependence on China. However, its ability to balance ties with both India and Beijing may prove unsustainable in the long term.