Russia and India are taking big steps to rely less on the U.S. dollar for their trade deals. Now, almost 90% of their trade is done in their own currencies or other alternative currencies, which is a huge change from how things used to be. This shift has come as both countries look to deepen their partnership and work around the economic hurdles caused by Western sanctions.
A Growing Trade Partnership
This new approach has paid off: over the last five years, trade between Russia and India has increased more than five times. This has made India Russia’s second-biggest trading partner. These numbers were announced in New Delhi on November 12, 2024, when Russia’s First Deputy Prime Minister, Denis Manturov, and India’s Foreign Minister, S. Jaishankar, co-led the 25th meeting of the Intergovernmental Russian-Indian Commission on Trade, Economic, Scientific, Technical, and Cultural Cooperation.
The meeting wasn’t just about numbers—it was a signal of how both countries are working closely to build trust and make their economies more connected. By using their own currencies for trade, they’re both making a statement: they don’t want to be as dependent on the dollar, especially since Western sanctions have made dollar-based transactions more difficult for Russia.
Why the Shift?
In 2022, after Russia faced a wave of U.S.-led sanctions that cut many Russian banks off from SWIFT, Visa, and MasterCard, Russia and its trade partners were forced to look for other payment methods. This push to find alternatives sped up when Russia and India agreed to settle their trades without relying on the dollar. Instead, they’re mostly using the ruble, the rupee, and other currencies.
“We’ve reached a point where 90% of our trade is done in our own currencies or other alternatives,” Manturov said. “But there’s still more to do—we need to improve our banks’ connections to keep things running smoothly.”
The Balance Problem
While both Russia and India are pleased with their growing trade relationship, there’s a catch: trade between the two isn’t balanced. In the last year alone, India imported a massive $61.1 billion in goods from Russia, most of it crude oil. However, India’s exports to Russia were just $4.2 billion, creating a big gap.
India’s Foreign Minister Jaishankar talked about the importance of evening out this trade imbalance. He explained that Russia supplies India with essential resources like crude oil, coal, uranium, and fertilizers—goods that play a major role in India’s energy and food security. Balancing the trade flow, however, will require both countries to address certain barriers and support each other’s businesses.
Plans for Growth and New Deals
To reduce the trade gap, Russia is working on expanding what it buys from India. Recently, Russia has been importing Indian industrial equipment, pharmaceutical products, and agricultural goods like sunflower and soybean oil. Manturov also emphasized that Russia is eager to sign a free trade agreement between India and the Eurasian Economic Union (EAEU), a group that includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia.
This trade pact could bring a lot of new opportunities for both Russian and Indian businesses and allow goods to flow more freely between the countries.
New Trade Routes on the Horizon
To make trade even easier, Russia and India are exploring new transportation routes. Right now, most goods travel through the Suez Canal, but this route has become less reliable due to recent disruptions in global logistics. So, Russia and India are developing alternatives:
- North-South Transportation Corridor (INSTC): A 7,200-kilometer route that connects India to Russia and even parts of Europe, Central Asia, and Afghanistan through Iran.
- Vladivostok-Chennai Corridor: This route links India’s southeastern coast to Russia’s Far East, which could make trade faster and more direct.
- Northern Sea Route (NSR): This route along Russia’s northern coast could become a shorter path for shipping between Eurasia and Asia-Pacific regions.
What’s Next for Russia and India?
With this growing partnership, both countries are setting an example for trading outside the usual dollar-based system. As they work on their trade balance, expand their deals, and build new routes, Russia and India are showing the world a new way to trade—one that relies on mutual trust and national currencies instead of just the dollar.
Whether these steps will transform global trade is yet to be seen, but one thing is clear: Russia and India are committed to supporting each other in a rapidly changing world.
