Background:

• In 2024, Russia is India’s fourth largest trading partner. 
• In June 2022, the level of bilateral trade surpassed $3.5 billion. Two years later, in May 2024, the figure rose to $7.5 billion.
• The meeting between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin in July this year resulted in the announcement of setting up a bilateral trade target of $100 billion by 2030.
• Achieving this target requires efforts to address the problems which exist in different trade and economic aspects.

Issues in the relations:

• Limited Economic Complementarity: The list of products produced by both the countries are somewhat similar, which reduces the possibility of extending the trade far beyond energy. Both Russia and India are also promoting self-reliance in industrial production, with Russia focusing on technological nationalism and India pursuing its “Make in India” agenda.
• Sanctions Regime: International sanctions on Russia limit trade opportunities, especially in sectors that require stable financial transactions. 
  • Payment systems and logistics are not well-integrated between the two countries without the involvement of other countries.
• Limited Technology and Investment Cooperation: Apart from nuclear and military collaboration, there is a significant gap in large-scale investment projects, especially in the secondary sector. Bilateral technology cooperation lacks business orientation and research collaboration is minimal.
• Insufficient Scientific and Educational Collaboration: There is slow progress in academic, scientific, and STEM-based collaboration. A lack of joint research and educational initiatives creates an “information vacuum” and limits mutual understanding.
• Low Quality of Trade: India’s exports to Russia are often limited to low-value items like smartphones assembled by foreign companies, while higher-value engineering and technology exports are minimal.
• Logistics and Trade Infrastructure: Inadequate logistics routes and no single logistics operator for transport corridors, and a lack of investment protection agreements reduce efficient trade between the two nations.

Solutions to Strengthen India-Russia Relations:

• Financial Integration and Payment Mechanisms: Both the countries should establish financial frameworks like integrating national payment systems (such as India’s UPI and Russia’s MIR) and creating dedicated payment gateways to bypass sanctions. 
  • This will help facilitate smooth transactions and boost small and medium enterprises’ involvement in trade.
• Joint Technology and Industrial Projects: Large-scale cooperation in technology sectors beyond defence, focusing on industrial modernisation can be developed. 
• Educational and Scientific Partnerships: Cooperation in science, technology, engineering, and mathematics (STEM) through joint academic programs, student exchange initiatives, and research projects can help to bridge the information gap and foster mutual understanding.
• Diversification of Trade and Investment: Indian companies can invest in Russian sectors with potential for growth (agriculture, medical equipment, and machinery), while facilitating Russian investments in Indian infrastructure and energy projects.

Conclusion:

• In order to have a more stable footing, India and Russia should look at how to increase integration in bilateral production chains and negotiate issues of localisation.