Seeing Western businesses withdraw, the South Asian country boldly poured money, "bet" big on Russia

RT news agency (Russia) recently reported that India's UFlex Group will build a paint and glue production line in Moscow.

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Indian company "bets" on Moscow

An investment agreement was recently signed between Governor of Moscow Andrei Vorobyov and CEO of UFlex Group Ashok Chaturvedi.

According to official reports, UFlex, India's largest multinational packaging company, will invest 3 billion rubles ($37 million) in the new project and create 150 jobs.

“ We are delighted that our representative, our investment sector, has been warmly received by our Indian partners, which has enabled us to find new investors,” the office said . The Moscow Governor's press added that the project will benefit the region's processing and manufacturing industries.

The factory is capable of producing 28,000 tons of paint and glue annually and is expected to go into operation in February 2025, the report said.

India invests heavily in Russia. Photo: RT

Earlier in April, Yekaterina Zinovyeva, a Moscow official told TASS news agency that more than 10 Indian companies are successfully operating in Moscow.

Zinovyeva emphasized that the total investment volume of Indian companies is 11 billion rubles ($135 million), creating thousands of jobs.

" The total investment volume is 11 billion rubles ($135 million) with thousands of job opportunities created ," stressed Zinovyeva. " New projects are also underway, which will bring another investment of nearly 8 billion rubles ($98 million) to Moscow. The implementation of the projects will significantly increase the presence of Indian business in the country. our region" .
Russia-India trade relations improve

According to RT, the commercial and economic partnership between Russia and India has grown more and more in the wake of Western sanctions against Moscow.

In 2022, Russia became one of India's top five trading partners for the first time.

Official statistics show that bilateral trade reached a record $39.8 billion in the fiscal year 2022-2023.

Experts say Indian companies have a good chance to fill the gap left by Western companies in a range of industries such as pharmaceuticals, chemical fertilizers and high-tech products. .

Other important areas of Russia-India cooperation include transport infrastructure, agriculture and agro-processing as well as manufacturing and trade.

A year ago, Rajneesh Chopra, Global Business Development Manager of VA Tech Wabag Ltd., revealed that the company has actively turned those opportunities into millions of USD (19 million USD) orders in the past year. A month when European competitors withdrew from Russia, leaving Russian customers to look for alternatives.

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Billions of dollars stuck

Russia's oil trade with India is booming, but Moscow is unlikely to get the full benefit from those commercial contracts - Business Insider (USA) reports.

Even as Russian banks were cut off from global payment systems with the dollar dominated as part of Western sanctions against Moscow, the two countries continued to use their own rupees. India to trade.

However, Russia is currently having problems with rupee trading because of its trade balance imbalance .

Currently, India has more demand for Russian goods than the other way around - which means that every month Russia has more than $1 billion worth of rupees stuck in Indian banks. Degrees, as calculated by Bloomberg.

Russia cannot send the rupee home because India has restrictions on the cash flow of foreign investors. As a result, Russia is left "helpless" to the amount of rupees worth between 2 and 3 billion USD stuck in India every quarter.

This adds up to an estimated $147 billion in Russian foreign assets through 2022, according to Bloomberg calculations based on data from the Bank of Russia.

By comparison, Russia spent 5.51 trillion rubles, or $68 billion, on defense in 2022, according to a May 15 report by Reuters citing data from the Russian Federation Treasury.

Russian Foreign Minister Sergei Lavrov mentioned problems with the rupee earlier this month - he told reporters in India on May 5 that there was a problem with "billions of rupees accumulating in Russian accounts at foreign countries". Bank of India and we need to use this money."

"In this regard, the rupee should be converted into other currencies. This is being discussed," Lavrov said, according to Bloomberg.

"Russia has no alternative oil importer like India"
India and Russia are currently trying to figure out how Russia can use its growing reserves of rupees, Indian officials said.

Another option being discussed is for Russia to channel rupees into Indian infrastructure projects in exchange for shares, according to media reports. In these negotiations, however, Moscow does not appear to have much bargaining power.

"Russia has no alternative oil importer like India, so exporters and banks will gradually accept payments in rupees," said Alexander Isakov, Russia economist at Bloomberg Economics.

And while India can ramp up purchases of Russian oil by taking advantage of high discounts amid Western sanctions, Indian customers also have other options to meet their energy needs. .

Ian Hall, professor of international relations at the Australian International Institute, said:

"It is unlikely that India will continue to depend on Russian supplies in the medium to long term, given India's relatively close proximity to its traditional partners in the Middle East."

The Kremlin, Russia's central bank and India's foreign ministry were not immediately available for comment.

Earlier, Business Insider reported that Russia's crude oil exports continued to increase despite Moscow's threat to cut production three months ago.

In the four-week period to May 5, oil shipments by sea reached 3.55 million barrels per day, the highest level since Bloomberg began tracking data in early 2022.

Nearly all of Russia's crude oil exports were sent to China and India last month, and volumes to Asia also surged to a new high.

In February, the Kremlin announced output would drop by 500,000 bpd starting in March, citing Western sanctions on Russian oil. Sea exports continued to increase throughout March and April. In fact, Russia's oil exports rose above pre-conflict levels in April. According to Kpler data, China and India bought about 1 .5 million barrels per day, Turkey and Bulgaria are also top Russian customers.