After the outbreak of the Russia-Ukraine conflict, the Western world imposed unprecedented economic sanctions on Russia, which led to the interruption of Russia's traditional export routes and faced a severe test. Against this special backdrop, India has seized the opportunity to become one of Russia's largest trading partners, and the volume of trade between the two sides has risen significantly. But India is very chicken thief, because its own foreign exchange reserves are insufficient, and instead of giving the dollar settlement, it proposes to use the rupee.
However, with India's massive imports of oil and gas from Russia, the Russian side has hoarded large sums of Indian rupees. Due to the poor liquidity of the rupee on the international market and the fact that it cannot be freely convertible like the dollar, the existence of this money poses a thorny problem for Russia.
In order to solve this urgent need, the Russian side has come up with an ingenious plan of "killing three birds with one stone": Russia continues to export oil and gas to India at a discounted price in exchange for large rupees; India, on the other hand, sold some of its energy to EU countries at a high price after a little processing; Finally, Russia is using hoarded rupees to buy all kinds of goods and services from India on a large scale.
As soon as the plan was launched, it was well received by all parties, and it can be said that it is a few in one fell swoop. Russia solves the problem of unsalable energy and rupee hoarding; India, on the other hand, has made a handsome profit; Although European countries are buying high-priced energy, they have also relatively alleviated the domestic energy crisis.
Buying large sums of Indian goods to digest rupees
In order to effectively absorb the rupee funds on hand, Russia's purchases of goods and services from India have been expanding. According to Russian media reports, Russia's imports from India increased by 33% year-on-year last year.
Russia not only imports a large number of traditional commodities such as daily necessities and agricultural products from India, but also extends its tentacles to India's advantageous area - high-tech service industry. India is a global leader in healthcare, IT, engineering and other fields, and Russia is interested in sourcing related services from these industries to improve its technological level.
Russia and India complement each other's areas of strength, and are becoming an important driving force for the upgrading of bilateral economic and trade cooperation. Indian Foreign Minister S Jaishankar welcomed Russia's expansion of purchases of goods and services from India, and said that India is willing to provide Russia with various products to fill the gap caused by Western sanctions.
In addition to normal trade, Russia is also considering implementing assistance projects in India in the form of rupee funds for bilateral cooperation. Due to the limited liquidity of the rupee in the international market, it is a win-win situation for the Russian side to "reinvest" it back in India.
This new model of India-Russia economic and trade cooperation can be described as an outstanding innovation in a turbulent geopolitical landscape. It maximizes the interests of all parties and reflects the foresight and creativity of all parties. By skillfully orchestrating the flow of goods and money, Russia can absorb the rupee money it has, India can reap the economic benefits, and the European Union can alleviate the energy crisis, and a win-win-win situation is emerging.
The risks of the new model
Although this new model of India-Russia economic and trade cooperation may seem ingenious, there are also some risks that should be guarded against.
India and the European Union "bypass" Western sanctions and launch large-scale energy trade with Russia will inevitably be dissatisfied and countered by the United States and other Western countries. The United States has repeatedly warned India to reduce its dependence on Russian energy, otherwise it may face a dilemma of "partnership or sanctions".
India's lucrative profits as a middleman are likely to provoke suspicion and backlash from Western countries. They are likely to accuse India of "pumping money into Russia" to further intensify economic sanctions against India.
While Russia's massive purchases of Indian goods and services have helped to absorb the rupee, if India unilaterally implements this policy, it will lead to a trade deficit and currency depreciation in the long run. Therefore, India needs to weigh its own economic interests and balance the implementation process.
In addition to economic risks, this new model could also intensify the confrontation between Russia and Western countries, further worsen Russian-Spanish relations, and trigger new geopolitical conflicts. Since Russia and India are a comprehensive strategic partnership, India also needs to carefully consider the balance of its relations with the United States and Western countries when implementing this new model.
As clever as the new model may seem, there are a number of risks lurking in it. All parties need to be very cautious to guard against possible ripple effects. At the same time, it is also necessary to maintain determination, promote economic and trade cooperation, and open up new development opportunities in the midst of the crisis.
In fact, under the current turbulent international situation, innovative economic and trade cooperation models will be the general trend. The traditional unilateral model is unsustainable, and only by breaking the conventional thinking and creating a win-win situation is the way to sustainable development.
Although there are certain risks associated with this new model of India-Russia economic and trade cooperation, it also shows a bold and innovative spirit. It embodies the wisdom of all parties to "hold on" and "start anew" in the crisis, and sets a successful example for a new model of cooperation between other countries.
Catalyzed by the wave of globalization, this new model of "win-win cooperation" will surely become the general trend. Although there are still many uncertainties, as long as all parties take action based on the principle of mutual benefit and win-win results and risk management, this model will definitely be able to win a broader space for development.