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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