A Strategic Partnership in a Shifting World
Amidst growing geopolitical turbulence and trade pressures, India and Russia are forging a deeper economic alliance. This interactive report explores the key drivers, data, and implications of their strategic shift away from the US dollar and towards greater bilateral cooperation.
External Affairs Minister S. Jaishankar and Russian Foreign Minister Sergey Lavrov meeting in Moscow.
Bilateral Trade (2024-25)
$68 Billion
▲ +523% since 2021
Trade Deficit (2024-25)
$59 Billion
▲ Widened 9x since 2021
De-Dollarization Rate
~90%
of trade settled in Rupee/Ruble
Trade Deep Dive: Growth vs. Imbalance
Bilateral trade has skyrocketed, primarily fueled by India's increased imports of Russian hydrocarbons. While this growth is significant, it has created a stark trade imbalance that both nations are now urgently seeking to address. This chart visualizes the rapid expansion and the resulting deficit.
The blue bars show the explosive growth in total trade value, while the orange line tracks the widening gap between India's imports from and exports to Russia. To counter this, India is actively promoting exports in sectors like engineering, pharmaceuticals, and textiles, and both nations are working towards a Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU) to diversify and balance trade.
The De-Dollarization Initiative
A cornerstone of the renewed partnership is the strategic move to conduct trade in national currencies. This reduces reliance on the US dollar, insulating their economies from third-party financial pressures and sanctions. Currently, an estimated 90% of bilateral payments are settled in Rupees and Rubles.
Why Shift Currencies?
This move aims to create a more resilient and independent financial ecosystem. Key benefits include lower transaction costs, reduced risk from currency volatility against the dollar, and the ability to maintain trade flows despite international sanctions. It's a significant step towards economic sovereignty for both nations.
Challenges Ahead
While beneficial, this shift is not without its hurdles. Both countries must work to manage the exchange rate volatility between the Rupee and Ruble and continue building the necessary banking and financial infrastructure to support seamless, large-scale transactions outside the dominant global systems.
Geopolitical Context & US Tariffs
This strategic alignment didn't happen in a vacuum. It is a direct response to increasing economic pressure from the United States, particularly the imposition of steep tariffs on Indian goods, cited as a penalty for India's continued energy trade with Russia.
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US Imposes Tariffs
The US government imposes steep tariffs of up to 50% on a wide range of Indian goods. The stated reason is to apply "secondary pressure" on Moscow by penalizing India for its continued large-scale purchases of Russian crude oil.
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High-Level Talks in Moscow
India's External Affairs Minister S. Jaishankar holds key talks with Russian Foreign Minister Sergey Lavrov. The agenda is dominated by creating economic mechanisms resilient to external pressures.
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Strategic Response Solidifies
Both nations accelerate the de-dollarization of their trade, finalize terms for an FTA with the EAEU, and commit to a bilateral trade target of $100 billion by 2030, signaling a clear path towards a deeper, more independent economic partnership.
