The India-Russia Strategic Partnership is now in its 25th year. Bilateral trade has reached USD 68.7 billion in FY 2024-25, yet this milestone masks underlying structural challenges that demand attention.
The Valdai Discussion Forum in October 2025 has added a new dimension to India-Russia relations. Russian President Vladimir Putin acknowledged the trade imbalance and asked Moscow to take corrective measures.
To sustain this long-term relation, there is a need to correct these structural imbalances. In line with this view, the Russian President has highlighted the need to actively "soften the trade imbalance." This will primarily involve increasing imports from India and ultimately unlock the partnership's full economic potential.
25 Years of Strategic Partnership
In October 2000, the Declaration on the India-Russia Strategic Partnership, signed during President Putin's visit to India. This declaration established a qualitatively new framework that elevated bilateral cooperation across political, security, economic, defense, and cultural spheres. In 2010, this relationship was elevated to a "Special and Privileged Strategic Partnership," reflecting mutual trust and recognition of each nation's geopolitical significance.
Over 25 years, the partnership has maintained continuity through Annual Summits between the Indian Prime Minister and the Russian President. President Putin confirmed his visit to India in early December 2025 for the next summit, signaling Moscow's commitment to New Delhi.
Defence cooperation serves as the primary anchor for the India-Russia relationship. Russia remains India's second-largest arms supplier, highlighted by key agreements like the $5 billion S-400 surface-to-air missile system. Overall military-technical cooperation between the two nations has been officially extended until at least 2031.
The partnership has matured beyond a buyer-seller dynamic into joint development projects like the BrahMos cruise missile and licensed production of T-90 tanks and AK-203 assault rifles under 'Make in India' initiative.
Trade Imbalance Crisis
The economic structure of Russia-India relations is characterized by growth coupled with imbalance. Indian imports from Russia totaled USD 63.84 billion in FY 2024-25, while exports stood at USD 4.88 billion (13:1 ratio).
This asymmetry is driven by India's crude oil imports. Russia became India's largest oil supplier in 2024, providing 1,754 thousand barrels per day. This represents 37% of India's total crude imports.
By June 2025, India emerged as the largest recipient of Russia's seaborne crude oil, absorbing 80% of total shipments, up from less than 1% before the Ukraine-Russia conflict. This demonstrates India's approach to energy security: importing based on market factors by leveraging the discounted crude oil with the overall objective of ensuring the energy security of 1.4 billion people of India. India diversified its suppliers and improved the resilience of its oil supply chain against traditional risks and market volatility.
Rupee Surplus Problem
The trade imbalance has generated financial challenges as billions of Indian rupees have accumulated in Special Rupee Vostro Accounts (SRVAs) in Indian banks. The Russian Foreign Minister identified this surplus as a "problem," noting Russia's inability to use these funds for international transactions outside the Western financial system.
This constraint must be addressed to maintain the partnership's sustainability. Without mechanisms to utilize accumulated rupees, Russian entities face stranded liquidity, undermining their willingness to continue energy exports to India on favorable terms.
Putin's Valdai Mandate
At the Valdai Discussion Forum on October 2, 2025, President Putin addressed this crisis, directing the Russian government to "soften the trade imbalance." Timed before his December 2025 India visit, this mandate prioritizes two sectors for increased Russian purchases:
- Indian Pharmaceuticals: India's pharmaceutical exports to Russia reached USD 520.5 million in 2024-25. The Ukraine conflict disrupted European pharmaceutical supply chains, compelling Russian entities to turn to India for generic drugs, Active Pharmaceutical Ingredients (APIs), vaccines, and medical devices.
- Agricultural Products: Russia expressed interest in formalizing agricultural cooperation through a Memorandum of Understanding (MoU). Current Indian agricultural exports include fish, shrimp, rice, tobacco, tea, coffee, and grapes. Russia also imports Indian inorganic chemicals for domestic fertilizer and pharmaceutical production.
RBI's Financial Engineering
The Reserve Bank of India (RBI) implemented regulatory measures in August 2025 to address the rupee surplus crisis. The measure allows Russian entities to invest accumulated rupee balances into Indian assets:
- Indian Government Securities (G-Secs)
- Bonds and equity markets
- Infrastructure projects
This response mitigates Russia's liquidity crisis, sustains discounted oil flows, and provides long-term capital for India's infrastructure development. Russia becomes a long-term investor, helping India reach its USD 50 billion bilateral investment target by 2025.
The RBI is considering adopting Russia's System for Transfer of Financial Messages (SPFS) to facilitate secure rupee-ruble transactions outside the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. This aligns with India's de-dollarization strategy, making transactions cheaper and quicker by eliminating dollar conversions.
INSTC: Logistical Foundation
The International North-South Transport Corridor (INSTC) serves as the key infrastructure for delivering on Putin's Valdai mandate. This multimodal transit route connecting India, Iran, Russia, and Central Asia is projected to be 30% cheaper and 40% shorter than Suez Canal routes.
The INSTC represents the structural foundation for diversified Russia-India relations. If operational, it increases the competitiveness of Indian agricultural and pharmaceutical exports in Russian and EAEU markets, making the Valdai trade rebalancing feasible and sustainable. This logistical efficiency transforms a geopolitical crisis response into a strategic economic corridor.
Strategic Autonomy and Geopolitical Pressures
India's continued energy dealings with Russia demonstrate its 'strategic autonomy' doctrine. This autonomy, however, carries costs. Indian exports to the US face an additional 25% penalty tariff, linked to Russian oil purchases. The European Union's 18th sanctions package introduced restrictions on third-country imports of Russian petroleum products, expected to impact India's refining industry from mid-2026.
Despite these geopolitical pressures, India maintains a position of neutrality regarding the conflict in Ukraine and advocates for its swift resolution. In multilateral forums like BRICS and the Shanghai Cooperation Organisation (SCO), India coordinates with Russia on advocating multipolar world structures while preserving independent positions on issues like Israel-Iran tensions.
Strategic Cooperation
Nuclear Energy: Russia remains key to India's nuclear roadmap targeting 100 gigawatts by 2047. The Kudankulam Nuclear Power Plant exemplifies this technological trust, with Russian collaboration on maintenance and component supply for the sixth reactor unit. This partnership addresses India's energy demands driven by industrialization and technologies like AI data centers.
Advanced Technologies: At Valdai, Putin welcomed proposals for a joint fund for AI and technologies, a step toward modernizing Russia-India relations beyond defense and energy sectors for the digital era.
Conclusion
After 25 years, the Russia-India strategic partnership is acquiring new dimensions through the Valdai Discussion of October 2025.
The structural changes mandated in 2025, moving from trade-for-cash to trade-for-investment, and from commodity dependence to corridor-enabled diversified commerce signal political commitment. This partnership remains key to India's strategic autonomy, enabling navigation of pressures in a multipolar global order.
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Russia-India Strategic Partnership FAQs
1. What is the current Russia-India bilateral trade value in 2025?
Ans. USD 68.7 billion in FY 2024-25.
2. What is the trade imbalance ratio between Russia and India?
Ans. 13:1 ratio (India imports USD 63.84 billion, exports USD 4.88 billion).
3. What is India's nuclear energy target by 2047?
Ans. 100 gigawatts.
4. Which two sectors did Putin prioritize for increased Russian purchases from India?
Ans. Indian pharmaceuticals and agricultural products.
5. What penalty tariff do Indian exports to the US face due to Russian oil purchases?
Ans. 25% additional penalty tariff starting August 2025.