By Aleksei Zakharov
Introduction: A Record Yet Imbalanced Trade
Since 2022, bilateral trade volumes between Russia and India have far surpassed the target of US$30 billion set by the two countries in 2015. In FY2024–25, trade turnover amounted to US$68.7 billion, mainly because of increased imports of crude oil by India, which comprised around 80 percent of bilateral trade. Encouraged by the spike in trade activities, India and Russia adopted a new target of US$100 billion by 2030, which the Indian external affairs minister described in 2024 as “more than realistic.”
The two sides have implemented several steps to facilitate the flow of goods, including developing a national currency mechanism, improving logistics, and arranging insurance solutions, with the aim to move away from reliance on Western entities. First, transactions between India and Russia are now dominated by the rupee–ruble settlement, as per the Reserve Bank of India’s (RBI) July 2022 decision to allow imports and exports in the Indian currency. This currently accounts for more than 90 percent of bilateral trade operations. However, the scheme initially left Russia with a significant surplus of rupees. Although it became a thorny issue for bilateral economic ties in 2022–23, New Delhi and Moscow found a solution by investing this money into the Indian economy and injecting more capital into Russian businesses in India.
Second, transport connectivity between the two countries has gradually progressed, building on the operationalisation of the Vladivostok–Chennai maritime corridor and the incremental growth in utilisation of the International North–South Transport Corridor (INSTC). Third, oil shipments are now reliant on protection and indemnity coverage provided by Russian insurers, facilitating their delivery to Indian ports, despite sanctions against the Russian tanker fleet.
Additionally, in May 2024, India and Russia signed a bilateral agreement between the customs authorities on Authorized Economic Operators, which has had “a big impact on smoothening the ease of doing trade.” This was followed by a protocol on the exchange of pre-arrival information regarding goods and vehicles, signed in December 2025 and intended to further optimise customs control procedures.
The acceleration of India’s trade talks with the Eurasian Economic Union (EAEU) is seemingly an extension of bilateral measures. The 18-month work plan, which was adopted as part of the Terms of Reference signed in August 2025, entails opening new EAEU markets to Indian micro, small and medium enterprises (MSMEs); farmers; and fishermen.
The Plateau in Trade
Although bilateral trade has expanded and become more immune to external risks, recent dynamics show that the impressive growth in volume has gradually lost momentum, perhaps reaching its ceiling. This was confirmed by President Vladimir Putin in his remarks at the India–Russia summit in December 2025 when he said that the trade figures for 2025 would remain unchanged.
There are several reasons behind this. First, some of the supplies from Russia to India have been severely impacted by Western sanctions. Diamond exports, for example, have plummeted from US$1.4 billion to US$400 million since the Group of Seven (G7) and European Union (EU) banned direct and indirect imports of precious stones originating from Russia in 2024. This has affected India’s polished diamond industry, which traditionally sourced raw materials from Russia. This led the Indian government to raise its concerns with a delegation from Belgium, one of the main sources of India’s diamond imports, during an Indian visit by the Belgian foreign secretary in 2024. However, attempts to change the situation have apparently been futile, with the Indian imports of precious stones from Russia dropping considerably since April 2024.
Russian crude supplies, which form the basis of bilateral trade with India, have also been targeted by several rounds of sanctions imposed by the US and EU. While generally showing high levels of resistance to external restrictions, oil supplies have seen greater interruptions following the Biden administration sanctions of January 2025, which hit oil companies and nearly 200 tankers, as well as the European sanctions of July 2025, which blacklisted the Indian-owned Nayara Energy company, in which Russia’s biggest oil producer, Rosneft, has a 49.13-percent stake. In October 2025, the Trump administration, which refrained from any restrictions on Russian economy in its first eight months, blacklisted Rosneft and another large Russian oil company, Lukoil, along with their subsidiaries. These measures have disrupted shipping and forced some Indian refineries to restrict their operations with the sanctioned entities.
Second, bilateral trade remains lopsided in Russia’s favour. Despite much talk and expectation, Indian exports to Russia have grown only marginally, from US$3.1 billion in FY2022–23 to US$4.9 billion in FY2024–25. Nonetheless, India’s exports to Russia have diversified over the past three years, with notable surges in shipments of automatic data-processing machines and electronics, specifically smartphones.
A significant trade imbalance poses a problem without an immediate solution. India cannot supply goods or commodities to Russia on the same scale as Russian energy resources, particularly given the reluctance of Indian private businesses to enter the Russian market or engage in transactions with their Russian counterparts. Beyond the oft-cited reasons of the existing sanctions threat and an absence of sufficient information, which are somewhat exaggerated, the non-tariff barriers and regulatory impediments have also hindered progress.
All these factors have made it difficult to reduce the trade imbalance and scale up trade. Yet, when push comes to shove, as evidenced by Russian businesses doubling down on their efforts to enter the Indian market, it is possible to overcome the hurdles to reinvigorate partnerships and create new joint ventures (JV).
Investment Cooperation
The investment partnership between India and Russia has traditionally been limited to selected sectors and mechanisms. Russia has mainly invested through the foreign direct investment (FDI) route, focusing on sectors such as aerospace and defence, chemicals, oil and gas, and railways. Cut off from Western markets and stock exchanges and looking to utilise the surplus rupees, Russia has explored new opportunities to invest in India, including in JVs, infrastructural projects, government securities, and stocks.
New Delhi and Moscow have attempted to incentivise investment partnerships by holding regular meetings of working groups, organising business summits, and launching an investment forum in April 2024. This effort is also embedded in the Programme for the Development of Strategic Areas of India-Russia Economic Cooperation till 2030 that was signed at the bilateral summit in December 2025.
Major FDI Investments
The official data on Russia investment shows modest results. While Indian companies invested more than US$760 million in the Russian economy in 2024, Russia invested around US$200 million in India. Furthermore, Indian government statistics show that Russia is only 31st in the list of FDI equity inflows, with a modest cumulative investment of US$1.3 billion from April 2000 to September 2025. This equates to just 0.17 percent of the total inflows into the Indian economy during the same period.
The existing data, however, does not reveal the bigger picture: Russian companies, predominantly state-funded, have built solid connections with their Indian partners across several key industries. These links have spanned decades and have largely remained unaffected despite all the geopolitical headwinds.
Energy
The oil and gas sector has long been a major area of mutual interest in India–Russia relations. Since the early 2000s, Indian public companies have invested in upstream projects in the Russian Far East and Siberia, with cumulative FDI reaching US$16 billion.
The biggest Russian investment was Rosneft’s acquisition of a 49-percent stake in Essar Oil for US$12.9 billion in October 2016. This was also the largest single FDI inflow into the Indian economy. The deal included the second-largest refinery in India, located in Vadinar, with an annual throughput capacity of 20 million tonnes. An additional US$2 billion was reportedly paid for a port terminal to supply the refinery. Apart from that, under the brand of Nayara Energy, the company has expanded its retail network to over 6,750 fuel stations across India. In total, Rosneft invested US$20 billion in the Indian economy, as announced by President Putin in December 2024.
Yet, Rosneft’s investments have not improved Russia’s standing among investors in the Indian economy, because some of the investments were done through its subsidiaries in other countries. For example, Rosneft acquired its stake in Essar Oil through its Singapore-based subsidiary, Petrol Complex Pte Ltd (later renamed Rosneft Singapore Pte Ltd), so this investment is counted as being from Singapore, not Russia.
Russian investments in the Indian energy sector have seemingly paid off, with Vadinar emerging as the second-largest Indian refinery after Jamnagar to source Russian oil post 2022. Despite being included in the eighteenth package of EU’s sanctions against Russia, Nayara Energy has moved ahead with processing Russian oil and supplying petroleum products, such as diesel, gasoline and jet fuel, to global markets. Additionally, while denouncing the sanctions as “unjustified, illegal, and a direct threat to India’s energy security,” the company reaffirmed its commitment to invest INR 70,000 crore (approximately US$8 billion) in downstream projects linked to its refinery.
Russian nuclear power company Rosatom has been constructing the Kudankulam Nuclear Power Plant (KNPP) in Tamil Nadu since 2002. Under the intergovernmental financial arrangement signed in June 1998, Russia was to provide a loan of up to US$2.6 billion for Units I and II of the plant. This state credit was offered at an interest rate of 4 percent per annum, covering 85 percent of the cost of the Russian scope of work, including nuclear fuel. The other 15 percent of the cost of the Russian scope of work, as well as the remaining Indian cost of the project, were to be financed by the Nuclear Power Corporation of India as equity. In December 2001, the Indian government approved funding for the project, totalling INR 13,171 crore (US$2.8 billion), comprising equity funding of INR 6,755 crore (approximately US$1.44 billion) and Russian credit of INR 6,416 crore (approximately US$1.36 billion), with an option to raise additional domestic debt. However, the project cost was revised twice: first, to INR 17,270 crore (approximately US$3 billion) in 2013, then to INR 22,462 crore (approximately US$3.6 billion) in 2014, due to increased expenses related to interest during construction, manpower costs, establishment costs and the deployment of Russian specialists at Kudankulam. Units I and II of KNPP have been operational since December 2014 and October 2016, respectively. Construction of the remaining four units is expected to be completed by 2027.
Machinery
Russian heavy equipment maker Uralmash has worked with India since the 1950s. During his trip to the Soviet Union in 1955, Indian Prime Minister Jawaharlal Nehru visited the Uralmash plant to inspect the production process of equipment for India’s first metallurgical plant in Bhilai. Uralmash has also supplied equipment for Steel Authority of India Limited (SAIL) plants in Bokaro, Durgapur, and Rourkela as well as for Coal India Ltd (CIL) mines.
Currently, it is present in the Indian market through its JV with SRB International, which was formed in 2016. This is the first Indo–Russian JV in the heavy equipment manufacturing sector. Although the companies have not publicly disclosed their expenditure, it is designed as a 50/50 partnership. An Uralmash representative stated that the company would invest US$5–6 million a year in Uralmash SRB India. The JV’s main objective is to set up a manufacturing base in India for producing machinery for the mining and steel sectors.
Since the construction of the Kudankulam nuclear power plant began, Uralmash has delivered heavy equipment, including polar cranes, trestle cranes, and transfer machines to it. In April 2021, it won a tender worth over US$350 million to supply five walking draglines to CIL. This was the largest contract for the Russian company in over three decades. Delivery of the first dragline to India began in June 2022. As part of the agreement, Uralmash will provide servicing and maintenance for the draglines, including supplying spare parts and accessories for 11 years from their commissioning date.
Another Russian company that specialises in equipment production and operates across various sectors is Power Machines. Focusing on power engineering, the company provides manufacturing, supply, installation, servicing and modernisation services for thermal, nuclear, hydraulic and gas-turbine power plants. Since the 1960s, it has been involved in dozens of projects in India. For example, under a 1997 contract, Power Machines shipped four hydropower units sets of 250W for the Tehri Hydropower Plant (HPP) in Uttar Pradesh. The first stage of the Tehri HPP was completed in 2008, with Power Machines being responsible for building, start-up and commissioning supervision. Additionally, the company delivered two hydropower units of 75 MW each for Balimela HPP in Odisha and modernised three hydraulic turbines for Loktak HPP in Manipur, increasing their power output from 35 MW to 45 MW. In 2007, the Russian company opened its subsidiary in India—Power Machines India Ltd—which was involved in the construction of the Sipat and Barh Thermal Power Plants and the Kudankulam NPP.
Portfolio Investments
Beyond rising willingness to enter JVs with Indian companies, Russian firms and individual investors have been exploring portfolio investments and deals in venture capital and private equity. The volume of Russian portfolio investment has surpassed US$2 billion in 2024. This has been facilitated by the Russian financial groups obtaining licences to enter India’s securities market, as well as their agreements with local partners to provide Russian investors access to the Indian market.
Since 2023, over twenty Russian entities, including financial services groups such as Alfa Capital and Finam, and the largest Russian banks Sberbank, VTB and T-Bank, registered as foreign portfolio investors (FPI) with the Securities and Exchange Board of India (SEBI). Several brokerage firms with FPI licences have invested on behalf of their clients. Beyond the intention to use the rupees lying in special accounts in India for investment in stocks and securities, India is seemingly emerging as a new destination for Russian portfolio investors, who perceive the country as a “stable, predictable and accessible market” and a “safe harbour”[59] for doing business in the context of Western sanctions.
During President Putin’s visit to India in December 2025, Herman Gref, the CEO of Sberbank, announced a new initiative: a mutual fund that will allow Russian retail investors to invest in India’s stock market. Dubbed as a “financial bridge” between the two countries, the new investment route will be linked to the performance of the NSE Nifty 50 index, providing Russian investors with exposure to the 50 Indian companies with the highest market capitalisation.
Start-up Investments
Since the 2010s, Russian investment funds have shown interest in Indian start-ups. Several private equity funds have made investments in rising Indian companies in areas such as e-commerce, food delivery, transport and logistics, fintech and digital banking.
DST Global, founded in 2009, is one of the most prominent portfolio investors in Indian start-up ecosystem. It entered the Indian market in 2014–15, with investments in Flipkart, Ola Cabs and Swiggy. The firm is still active in India, with its portfolio comprising equities in start-ups such as Cred, Cars24, RazorPay and Udaan. However, DST Global cannot currently be qualified as a Russia-related private equity investor because its owner, Yuri Milner, renounced his Russian citizenship in 2022. Milner claims that he cut his ties to Russia in 2014 when his family left the country and moved to the United States.
Ru-Net Holdings is another venture capital fund with Russian roots that has focused on investments in India. Founded in 1999 by Russian entrepreneur Leonid Boguslavsky, the firm was rebranded as RTP Global in 2018. The RTP Global has US$4 billion in total assets under management and a US$1 billion fund for investing in start-ups, with one third of its investments being earmarked for India. In the early 2010s, the venture capital firm invested in several Indian start-ups, including Snapdeal, FreeCharge and Faasos Food Services. Its current portfolio features several dozens of Indian companies, such as GoKwik, Practo, Rebel Foods, Newton School and Vahak. Following Russia’s war with Ukraine in 2022, RTP Global has distanced itself from Russia. Boguslavsky, who presents himself as a Canadian entrepreneur, has disappeared from the public eye. His fund maintains that it has no offices or operational presence in Russia.
AFK Sistema, a Russian conglomerate with unsuccessful experience in India’s telecoms sector, set up a fund in 2016 targeting Indian start-ups operating in technology and niche consumer retail. Sistema Asia Capital, a private equity firm registered in Singapore, has invested in over a dozen of Indian start-ups such as Infra.Market, Rebel Foods, Uniphore, HealthifyMe and Licious. In November 2023, AFK Sistema and its affiliated entities, including Sistema Asia Pte Ltd, were blacklisted by the US Department of the Treasury. The firm, however, has continued its operations in India and Southeast Asia.
Conclusion
Despite sanctions and ensuing challenges with transactions, Russian companies have been actively entering the Indian market. It appears that New Delhi and Moscow have succeeded in setting up new financial connectivity between the two countries, finding mutually beneficial solutions for moving ahead with economic projects.
For Russian businesses that have lost access to European markets, India seems to be attractive owing to its huge market, manufacturing capabilities, and strategic location. These factors allow them to use their footprint in India both for operations within the country and as a platform for expansion to other countries of the Global South.
The growing number of JVs between India and Russia is indicative of mutual interest in collaborations across different areas. Russia continues to be instrumental for India in critical industries such as energy, metallurgy, machinery, and railways. In many ways, there is historical continuity as some of the Indian facilities built in the Cold War era with Soviet assistance are still reliant on Russian supplies and servicing.
Beyond the formation of JVs, Russian entities and private businesses are increasingly interested in the Indian stock market, investing in shares and bonds in rapidly growing sectors. Even as bilateral trade has seemingly reached its limit and requires structural measures to enable the flow of goods, particularly India’s exports, to pick up, there is ample room for Russian investment in India to increase. As long as Russia is isolated from Western markets, Russian businesses will continue to gravitate towards India. However, the profitability of bilateral projects will largely depend on further integration of the two countries’ financial systems, a better understanding by Russia of the Indian market’s key players and rules, and a willingness to localise production and engage in long-term tie-ups.
Aleksei Zakharov is Fellow, Russia & Eurasia, Strategic Studies Programme, ORF.
Observer Research Foundation
