My Take | India’s foreign and economic policies are looking like China’s
- New Delhi wants its own rupee-rouble trade, just like that between Russia and China using their own currencies. Despite being a member of the Quad, India may have as much incentive to see the dethroning of the dollar dominance in international trade and its weaponisation
Since the start of Russia’s invasion of Ukraine, India’s policy response, or non-response, has been remarkably similar to that of China. The Chinese, as you would expect, get all the bad press. India, as usual, gets a free pass. But, no less than China’s, the reasons behind India’s (in)actions are crucial to understanding the geopolitics and geoeconomics in the Indo-Pacific region. This is rather different from the narrative being peddled by Washington and its key Western allies. All this goes well beyond India and China’s common abstention in the United Nations vote against Russia.
New Delhi is pushing to protect the country’s bilateral trade with Russia using the rupee and rouble. This comes after the outbreak of hostilities to bypass Western-led sanctions. China and Russia have been expanding bilateral trade using the yuan and rouble long before the current conflict in Ukraine. The Chinese-Russian trade using currency swaps dates back to an agreement between the central banks of the two countries as early as 2014, but has expanded recently.
Now, especially facing pressure stemming from Western sanctions against Russia, India is considering ways to protect crucial trade in commodities, fertilisers and weapons with Russia.
According to the Hindustan Times, “As the Ukraine conflict deepens, India has stepped up efforts to secure critical imports from Russia, particularly potassium chloride (popularly known as muriate of potash), a key fertiliser, and sunflower (edible) oil.
“Led by economic affairs secretary Ajay Seth, the high-level panel also includes top bureaucrats of the ministries of food and consumer affairs, fertilisers, commerce, external affairs, agriculture and petroleum. The panel is scouring for avenues to set up a rupee-rouble bilateral payment system to escape a wave of unprecedented sanctions on Russia, which have crippled the former Soviet state’s financial system.”
In the short terms, both India and China face food security problems. That’s why China has lifted all wheat-import restrictions on Russia. Likewise, India is deeply worried about disruption to supplies of muriate of potash ahead of the kharif-sowing season in the summer. The Indian farm sector is the major source of income for half of the country’s population.