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Data | Russia’s exports to India rise further, trade deficit balloons

Russia crude oil exports: A view shows a facility of the crude oil terminal Yuzhnaya Ozereyevka owned by Caspian Pipeline Consortium (CPC) near the Black Sea port of Novorossiisk, Russia, October 29, 2022.

In February 2023, Russia sur­passed Saudi Arabia to be­ come the second biggest ex­porter of crude oil to India in FY23 ( chart 1). Iraq continued to retain the top spot, though the gap is closing fast. In the four­-month period between November 2022 and Febru­ary 2023, Russia took over the top spot, while the shares of Saudi Ara­bia and Iraq in India’s oil imports are fast decreasing ( chart 2).

Chart 1 | The chart shows the share of se­lect top countries in India’s crude oil imports in the April­-February period for the past four financial years. As can be observed, Russia’s share zoomed to second­-highest in FY23 from a negligible proportion in the previous years.

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Chart 2  | The chart shows the share of se­lect top countries in India’s crude oil imports in the last seven months. The data shows that Rus­sia is pulling away from Iraq and Saudi Arabia, and is leading by quite a distance.

Charts 1 and 2 show the share of petroleum oil exports from various countries to India. The four-digit-level HS code accessed was 2709 which shows the figures for petroleum oils and oils obtained from bituminous minerals (crude) imports from various nations to India

While the rise of imports from Russia was due to a surging inflow of crude oil, India is taking in other products too. In FY23 (till Febru­ary), 50% of India’s imports of pro­ject goods — input materials re­quired in infrastructure projects — were from Russia. Close to 30% of newsprint rolls, mineral/chemical fertilizers and sunflower/cotton seed oil each came from Russia in FY23 ( chart 3).

Chart 3 | The chart shows India’s imports from Russia (vertical axis) and its share in India’s total imports in FY23

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India and China have snapped up the vast majority of Russian oil in April at prices above the West­ern price cap of $60 per barrel, ac­cording to traders and  Reuters cal­culations. Oil loadings from Russia’s western ports in April will rise to the highest since 2019, above 2.4 million barrels per day, shipping sources told  Reuters. This means that the Kremlin is enjoying stronger revenues despite the West’s attempts to curb funds for Russia’s military operations in Uk­raine. A G7 source told  Reuters on April 17 that the Western price cap would remain unchanged for now, despite pressure from some coun­tries such as Poland, to lower the cap to increase pressure on Mos­cow. The advocates of the cap say that it reduces revenues for Russia while allowing oil to flow, but its opponents say it is too soft to force Russia to backtrack on its activities in Ukraine.

India and China have not agreed to abide by the price cap, but the West had hoped the threat of sanctions might deter traders from helping those countries buy oil above the cap. India accounts for more than 70% of the seaborne supplies of the grade so far this month and China for about 20%,  Reuters calculations show. Average discounts for Urals were at $13 per barrel in Indian ports and $9 to ICE Brent in Chinese ports.

But the sudden surge in oil im­ports meant that India’s trade def­icit with Russia ballooned in recent years.

Chart 4 | The chart shows India’s exports to Russia (vertical axis) and its share in India’s total exports in FY23

As shown in  chart 4, India exports pharma products, crusta­ceans, tea, coffee and some other products but relatively of much lesser value. And so, India’s trade deficit with Russia has surged in FY23, as shown in  chart 5.

Chart 5 | The chart shows the India’s trade deficit with Russia in $ million

On April 18, India and Russia agreed to address trade deficit and market access issues as New Delhi sought to narrow its trade imba­lance with Russia.  Reuters report­ed in November that Russia was potentially seeking to import more than 500 products from India. In­dian representatives said, in De­cember, that they shared a list of Indian products with Moscow for access to Russian markets.

Meanwhile, Russia’s richest pe­ople added $152 billion to their wealth over the past year, buoyed by high prices for natural resourc­es and rebounding from the huge loss of fortunes they experienced just after the Ukraine war began, Forbes Russia said. Also, recently Pakistan placed its first order for discounted Russian crude oil.

Source: Commerce Ministry’s import-export data bank, Centre for Monitoring Indian Economy (CMIE)

Also read: India and China snap up Russian oil in April above ‘price cap’

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