India puts national interest first to stick with Russia

In December last year, an increasingly isolated Vladimir Putin left Russia for only the second time during the pandemic. His destination was New Delhi, and his focus was on preparing for future conflicts.

Moscow works with New Delhi in the “military and technical sphere like with no other country”, the Russian president told prime minister Narendra Modi, calling India “a time-tested friend,” as he signed a new 10-year defence co-operation agreement.

The friendship would be challenged just eight weeks later when Russian troops stormed Ukraine, sending India scrambling to rescue more than 15,000 nationals, mostly students studying in the country.

While western nations condemned Russia’s aggression, New Delhi’s loyalty to its longstanding partner held firm. Last week India, as a temporary UN Security Council member, abstained from voting on a resolution to condemn Russia’s invasion, along with China and the UAE.

Analysts say India believes there is little benefit in alienating Russia, which it depends on for crucial commodities such as energy and fertiliser, while it sees neighbouring China, also a Russian ally, as a much greater strategic threat. Russia’s support is seen as vital to managing India’s unresolved confrontation with China on its northern Himalayan border after deadly fighting in 2020.

“Here in Delhi, Russia has always been [seen as] a dangerous tactical distraction for the west,” said Constantino Xavier, a fellow at the Centre for Social and Economic Progress in New Delhi. “From India’s perspective, the only actor that will come out stronger [from the war in Ukraine] is China.”

Although Modi appealed to Putin “for an immediate cessation of violence,” during a phone call on the day war began, Indian officials have steered clear of blaming the Russian president. Instead, New Delhi has stayed in touch with both Moscow and Kyiv as it prioritised evacuation operations for its citizens on Ukraine’s western borders.

India’s partnership with Russia goes back to the early days of its independence after 1947, when Prime Minister Jawaharlal Nehru drew inspiration for parts of his socialist economy from the Soviet Union.

Though “non-aligned” during the cold war, India grew close to the Soviets as the US drifted towards its nemesis Pakistan. Crucially, the USSR is credited as having helped India win its 1971 war with Pakistan over Bangladesh.

India’s ties with the US and Europe have strengthened since the cold war ended, and India — a member of the Quad security partnership with the US, Japan and Australia — is seen as an indispensable western ally and counterweight to China in Asia. 

Yet hemmed in by foes on its northern borders, India’s geographical position means it is loath to depend on distant western support. India has “China on one side and Pakistan on the other, both nuclear enabled,” tweeted Uday Kotak on Sunday. The managing director of Kotak Mahindra bank and one of India’s richest billionaires added that given “our dependence on Russian military equipment, and [that the] US is far away, we have challenges.”

“India watches the Russia-China relationship very closely,” said Tanvi Madan, a senior fellow at the Brookings Institution. “What they’ve seen for years is the relationship getting closer and closer. They haven’t wanted to push Putin further into Chinese arms.”

Madan argued that Modi’s unwillingness to criticise Putin — consistent with decades-long foreign policy — is well understood domestically. “Any other Indian government would likely have done the same thing,” she said. Opposition leader Rahul Gandhi has also refrained from condemning Russia.

Moscow has remained India’s most important military supplier. Russian tanks, aircraft and other heavy weaponry are deployed at India’s Himalayan border, and the countries are collaborating to produce arms in India too.

Some 65 per cent of arms transferred to India between 1950 and 2020 were from the USSR/Russia, an estimated $83.4bn of a total $126.7bn, data gathered by the Stockholm International Peace Research Institute shows.

As Putin arrived in India in December, so did deliveries of S-400 Russian-built missile defence systems, part of a $5.4bn deal signed two years earlier in defiance of Washington.

Observers say Moscow now needs its allies, like India and China, to help alleviate the crushing pressure of western financial sanctions.

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Although Russia-India bilateral trade was worth only about $8bn last financial year, Indian businesses with Russian links have been lobbying the government to let them keep trading with their counterparts, a person familiar with the matter said. The finance ministry declined to comment.

While India trades with Russia in dollars, “there’s a talk of going back to rupee-rouble trade which used to be the norm,” said Biswajit Dhar, a Jawaharlal Nehru University professor specialising in trade, referring to the period from the 1970s to the 1990s.

Strengthening bilateral banking, there are two Indian-government linked finance companies in Russia — Commercial Indo Bank, 60 per cent owned by the State Bank of India, and reinsurer GIC Perestrakhovanie LLC, fully owned by India’s General Insurance Corporation.

India’s government has not yet told Indian lenders what to do about sanctioned Russian banks. But India has previously been willing to ignore western sanctions, creating a payment mechanism for Iranian imports.

Rather than follow western restrictions, Dhar said he believed India would prioritise its trading relationship with Russia: “All these avenues will be explored, anything that can help continuation of trade ties. Everything is going to be used.”