It has been reported that Russia and India are in advanced talks to sign a free trade agreement (FTA) that will help strengthen economic ties between two of the world's largest countries, which both nations have sought to prioritize in recent years.
Despite many western nations drastically scaling back their imports and exports with Moscow since the invasion of Ukraine, India has maintained a more neutral stance, and as a result has become a key destination for Russian goods in the past year.
New Delhi is also keen to increase its own exports in the other direction, so with the two sides now in "advanced negotiations" to sign an agreement, what are the key drivers behind the discussions, what products are most likely to benefit from a more open trading environment, and how could it impact on both countries' wider ambitions?
What's driving Russia-India trade?
The last 12 months have seen a major increase in Russian exports to India, with Reuters noting that the value of these goods quadrupled year-on-year to $46.33 billion. The majority of this comes from oil, with Moscow finding that India has become an eager consumer of its products at a time when many western nations have almost completely halted their own imports of Russian energy and placed restrictive price caps on remaining sales.
This has helped the two countries meet their target of reaching a bilateral trade target of $30 billion three years ahead of the deadline previously set out by the Indian government.
Reuters previously reported that Moscow has identified more than 500 key products it could look to import from India in order to replace goods impacted by sanctions. These include cars, aircraft and trains.
Russian deputy prime minister Denis Manturov recently told an audience in New Delhi: "Together with the Eurasian Economic Commission, we are looking forward to intensifying negotiations on a free trade agreement with India."
How would an FTA impact relations?
One issue that New Delhi is keen to address is the growing imbalance in bilateral trade, largely caused by the significant increase in oil imports. India's external affairs minister Dr S Jaishankar said: "There are understandable concerns about trade imbalance and we need to work with our Russian counterparts to address this imbalance.
"Addressing that imbalance really means addressing the impediments - whether they are market access impediments, whether they are non-tariff barriers, whether they are related to payments or to logistics."
To encourage Indian exports, a trade delegation from the country has also been visiting Russia this month, with a focus on boosting sales of agricultural and food products. The leader of the delegation, NK Kagliwal, said the aim is to increase these exports from a value of around $750 million to over $3 billion in the next three years.
Other areas in which India is keen to increase its exports include electronics, medical devices, solar cells and textiles, the delegation added.
Meanwhile, Mr Manturov has also observed that road construction material and equipment, chemicals and pharmaceutical products are in high demand in Russia. "I am sure that this will create opportunities for Indian companies to increase their supplies to Russia," he said.
What could it mean for other bilateral deals?
An FTA with Russia would continue a major shift in trading policy from India, which has traditionally taken a protectionist attitude that was very wary of bilateral or multilateral deals. However, it is currently pursuing a range of FTAs, including an agreement with the UK that headed into an eighth round of talks earlier this month, as well as deals with the EU and the Gulf Cooperation Council.
While continuing to increase its ties with Russia is not expected to place any of its other negotiations in jeopardy, it could raise tensions if Moscow is seen to be using expanded access to Indian markets to bypass international sanctions, or if India is used as a backdoor to import restricted equipment such as dual-use items.
Meanwhile, the efforts are just one part of a larger Russian effort to reach out to other BRICS countries (Brazil, China, India and South Africa), which could be seen as an effort to counter a US-EU-led world trade system. Indeed, last year China floated prospects for a multilateral trade deal for the bloc, while Russian president Vladimir Putin has spoken of efforts to develop a new BRICS-centric reserve currency to compete with the US dollar.
Earlier this month, Russian foreign minister Sergei Lavrov visited Brazil, with the two countries recording a figure of US$9.8 billion in bilateral trade in 2022. While in the country, plans to increase Brazilian meat exports to Russia and fertilizer shipments in the other direction were on the agenda.