Russia is in the process of negotiating a free trade agreement with India to replace part of the products and investments that were prohibited by sanctions enacted after the outbreak of the Ukrainian conflict. Russia is now India’s largest oil supplier, and the country takes advantage of discounted Russian crude.
Russia and India negotiate new trade agreement
Russia and India are negotiating a new Free Trade Agreement (FTA) to increase trade integration between the two countries, which has prospered after the establishment of Western sanctions on Russia. According ReutersIndia’s Foreign Minister Subrahmanyam Jaishankar stated that the deal was at an “advanced deal” stage and this could secure bilateral investments between the two countries.
Russia, now India’s largest energy supplier, would seek to replace restricted import products with those from India. On this, Russian Trade and Industry Minister Denis Manturov stated:
We need to find a niche in the products that India can replace. On civil projects, we need as broad a cooperation as existed before the sanctions.
In November, there were reports that Russia was searching to purchase parts for cars, planes and trains from India and other countries, to replace sanctioned and affected imports.
India-Russia relationship thrives
Cooperation between the two countries has not been affected by the Russia-Ukraine conflict, because India has not condemned Putin’s actions, keeping public neutrality on the issue. This has allowed the country to take advantage of discounted crude, sold at a discount due to the recent adoption of the Dubai benchmark, avoiding the Europe-focused Brent benchmark.
On the other hand, India is trying to balance the trade balance. In December, the Indian government submitted a list of products that would be competitive in Russian markets for permission to export them to the country.
The completion of an FTA between the two countries would simplify the introduction of foreign products in both markets, depending on the final determination of said agreement. Russia is also finalizing another bilateral trade deal with Iran, a country that has also faced a sweeping package of US-based sanctions, to increase its levels of integration and trade without being constrained by foreign determinations.
The dangers of abusing the US dollar as a weapon to establish sanctions were recently recognized by US Treasury Secretary Janet Yellen, who stated that countries facing these sanctions would be determined to find alternatives.
What do you think of the new trade agreement that Russia and India are currently negotiating? Tell us in the comment section below.
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