NEW DELHI: As steep American tariffs strain India’s goods exports and create uncertainty for investors, Russian President Vladimir Putin’s visit to New Delhi is being seen as an opportunity for India to diversify its export markets and address the widening trade imbalance with Moscow. The deficit, driven largely by India’s surge in discounted crude oil imports following the Ukraine war, has crossed USD 60 billion.
Push to revive stalled EAEU trade pact
Putin’s two-day visit comes months after India and the Russia-led Eurasian Economic Union (EAEU) signed the Terms of Reference (ToR) in August, restarting negotiations on a Free Trade Agreement (FTA) that stalled in February 2022 after the conflict in Ukraine began.
The EAEU, a USD 5 trillion bloc comprising Russia, Armenia, Belarus, Kazakhstan and the Kyrgyz Republic, is emerging as a priority market at a time when Indian exports to the US have dipped for two consecutive months due to the 50 per cent tariffs imposed by Washington. With India’s manufacturing growth weakening and the rupee touching an all-time low of 90 against the dollar, New Delhi is accelerating efforts to expand its export footprint.
Russia signals intent to expand imports from India
Senior Russian officials have indicated that Moscow wants to balance bilateral trade by increasing purchases from India. Deputy Kremlin Chief of Staff Maxim Oreshkin said deeper trade ties were a “strategic choice”, while Russian Agriculture Minister Oksana Lut stated that Russia was ready to boost imports of shrimp, rice and tropical fruits from India.
India is currently the world’s largest exporter of shrimp and was a major supplier to the US until tariffs affected shipments, forcing exporters to look for new destinations. Lut added that Russian firms were also keen on sourcing Indian food processing equipment.
Commerce Minister Piyush Goyal said Russia’s demand for Indian industrial goods and consumer products presented “multiple untapped opportunities”, emphasising that the export basket needed more diversity and balance.
Current trade imbalance remains wide
India’s imports of Russian oil have risen sharply—from less than 2 per cent of India’s oil basket in early 2022 to nearly 35–40 per cent now. However, India’s exports to Russia have increased only modestly, from USD 2.39 billion in FY19 to USD 4.88 billion in FY25.
Last year, both nations agreed to eliminate tariff and non-tariff barriers and boost cooperation in manufacturing sectors such as transport engineering, metallurgy and chemicals. They also planned joint projects and expansion of bilateral industrial trade.
Payment challenges slow trade expansion
A major bottleneck has been the reluctance of private Indian banks to process payments linked to Russia due to fears of Western sanctions. Many banks have business operations in the US and Europe, making them cautious even after the RBI introduced a rupee trade settlement mechanism.
Exporters also complained of missing Standard Operating Procedures (SOPs) and high volatility in both the ruble and rupee, making currency-based trade risky.
New mechanism to ease financial risks
To address payment barriers, Moscow-based Sberbank has introduced a rupee-denominated letter of credit with deferred payment for Indian purchases. Under this system, the bank pays Indian suppliers in rupees immediately upon receiving shipment documents, while Russian buyers can repay later.
According to Sberbank, the mechanism reduces financial risks and improves flexibility for importers, potentially strengthening trade flows between the two countries.
Conclusion
Putin’s visit is expected to accelerate trade negotiations and deepen economic engagement at a time when India urgently needs to diversify beyond Western markets. While structural challenges—especially in payments and banking compliance—remain, both sides are signalling intent to close the trade gap and expand cooperation in sectors ranging from agriculture to industrial goods. With geopolitical shifts reshaping global trade patterns, India is positioning itself to secure stable, long-term access to new markets through strategic partnerships like the one with Russia.