India's imports from Russia have multiplied since April last year. The increase of 384 percent until January this year is mainly due to the purchase of cheap Russian oil. At the same time, Russia has become India's fourth largest supplier after China, the oil countries of the United Arab Emirates and the USA. In the previous year, it had only held rank 18 – despite major arms purchases.

Christoph Hein

South Asia/Pacific business correspondent based in Singapore.

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At that time, India had ordered goods worth almost 10 billion dollars from Moscow. Now it's more than $37 billion. In December alone, Indians bought 1.2 billion barrels (barrels of 159 liters each) of Russian oil daily; 33 times more than in December 2021.

India is the world's third largest importer of crude oil after China and the United States. After the Russian invasion of Ukraine, many countries in the world imposed an import ban on Russian oil and a maximum price of 60 dollars per barrel. This gives the Indians the opportunity to increase their imports at low prices.

India has "bought, refined and sold a lot of crude oil," said Sunil Barthwal, undersecretary at the Ministry of Commerce. As a result, the export value of oil products in the first ten months of India's fiscal year (ended March 31) rose from $51 billion to $79 billion, or 55 percent. The continued purchase of Russian oil is likely to be discussed behind closed doors during Chancellor Olaf Scholz's visit to New Delhi from Saturday.

However, the high level of imports is slowing down New Delhi's plan to internationalise the rupee. Given the skyrocketing trade surplus from oil sales, Moscow has no interest in earning billions of rupees.

India's central bank proposed a foreign exchange agreement in July to take the pressure off the rupee. It continues to lose value against the dollar. Billionaire Mukesh Ambani's major buyer Reliance now pays for its Russian oil supplies in dirhams, the Emirates' currency linked to the American dollar.

Indian growth depends on oil

The coalition of democratic countries that are imposing sanctions on Moscow tolerate India's actions – they see what will soon be the world's most populous country as an important strategic partner to keep China in its place. India is dependent on oil imports in order to maintain its growth of around 7 percent and thus ensure the stability of society.

Indian Foreign Minister S. Jaishankar, under pressure last year to justify the oil purchases, stressed: "It is a sensible policy to go where we get the best deal in the interest of the Indian people. And that's exactly what we're trying to do." Although India advocates an end to the war, it has not yet directly condemned the Russian invasion.

Meanwhile, Russia's opponents agree with the oil purchases: "It's an advantage for India, it's an advantage for the Indian economy. But it also helps to advance our two goals, stabilize markets and deny resources to the Kremlin," said Geoffrey Pyatt, deputy undersecretary for energy in Washington, referring to the exploitation of the price cap. "Even though India is not a member of the coalition of countries that set the cap, it has effectively used it in its price negotiations."

Behind the strategic thinking of the West, analysts also suspect the fear of driving Moscow even further into the arms of Beijing. India and China top the list of the largest buyers of cheap oil from Russia.