India is also exploring other options of payment channels through which it can trade with Russia and there is also the possibility of sourcing oil at a discount even if the West reduces Russian oil imports.
India is heavily dependent on oil exports, most of which comes from the Middle East, Africa, Europe, North America, South America and South East Asia. India's oil imports from Russia are only $1 billion. However, Russia is keen to increase it, even if the US and Britain are behind to reduce it. The offer is a lucrative supply deal as Russia is the second largest exporter of oil after Saudi Arabia. However, India will have to find other options for payment channels in the midst of this growing crisis. It will also be important for bilateral non-oil trade.
Since the Sanctions of the West and the exit of important Russian banks from the SWIFT system, Indian exports have come to a standstill by a total of $ 500 million, due to which bilateral trade between the two countries has been affected. Between January and February of fiscal year 2022, India imported $7.8 billion from Russia and exported $2.8 billion to Russia. With the important things like fuel and fertilizers that we ask from Europe, we are able to control inflation to some extent. Due to the increase in the availability of natural gas in the international market, the prices of urea are also affected and due to this, the concessional availability of urea to the farmers of India may be affected.
India meets 85% of its oil demand through imports, the government is also starting to look at other options which include electric vehicles, building strategic reserves, blending ethanol into oil as well as from Russia. Oil imports can also help us.
India and Russia are also looking at the option of trading in Rupee and Ruble. This will enable Indian exports to be paid in rupees. For this a bank shop will be required in Russia and India. Another option may be to require a bank that has limited exposure so that that bank is not banned. For additional Russian oil shipments, India needs access to more ships and containers. The capability of Indian refiners to process large quantities of crude oil also needs to be evaluated.
It has been the policy of New Delhi to get energy assets from different places so that the dependence on oil imports does not increase further. An example of this is the investment of Oil and Natural Gas Corporation Ltd. in Sakhalin, Russia. Apart from this, Russian company PJSC Rosneft Oil Company is a stakeholder in Naira Energy Limited, India's second largest refinery. The nuclear power project which has been built at Kudankulam in the Indian state of Tamil Nadu has been built in collaboration with Russia.