India Remains a Key Financier for Kremlin

Executive Summary:

• India’s increased economic cooperation with Russia since 2022, despite Western sanctions, has provided the Russian military-industrial complex with critical technological and financial support.
• India has helped Russia evade Western sanctions by providing Moscow with Nvidia artificial intelligence (AI) chips, octogen, and Swiss-made precision tools—all of which are used in intelligence and warfare systems.
• In response to India’s economic support of Russia, the United States imposed a tariff rate of 50 percent on Indian goods, but India has shown no signs of reducing economic cooperation with Russia or of seeking to push for a diplomatic settlement of Russia’s war against Ukraine.

On August 15, Ukrainian President Volodymyr Zelenskyy asked India, Russia’s long-time partner, to play a larger role in ending Russia’s war against Ukraine just three hours before the summit between Russian President Vladimir Putin and U.S. President Donald Trump in Alaska. Zelenskyy said, “We hope that India will contribute to efforts aimed at ending the war, so that our freedom and sovereignty are truly secure” (The Hindu, August 15). Last year, Zelenskyy noted that India was indirectly aiding the Russian military-industrial complex by acting as an intermediary in the supply of sanctioned Nvidia artificial intelligence (AI) chips to Russia, explaining that India helped the Kremlin acquire $300 million worth of the Nvidia AI chips (Ukraine Business News, October 29, 2024). An Indian pharmaceutical company played the role of an intermediary in a lucrative trade through which Dell servers equipped with Nvidia chips were sent into Russia despite sanctions imposed by Western nations. Zelenskyy’s Chief of Staff, Andriy Yermak, in a post last October on X wrote, “Despite the imposed sanctions, Russia continues to receive Western high-tech components used for the development and adjustment of electronic intelligence and warfare systems” (X/@AndriyYermak, October 7, 2024).

India has traditionally maintained close economic and defense ties with Russia, and Moscow remains India’s main weapons supplier. New Delhi refrained from condemning Moscow over its February 2022 invasion of Ukraine, instead increasing purchases of Russian oil to record levels,  helping the Kremlin evade subsequent Western sanctions (Times of India, August 28).

Indian firms have also been shipping explosives to Russia despite repeated warnings against this from the United States. Under a $1.4 million deal, the Indian company Ideal Detonators Private Limited shipped two batches of octogen to two Russian companies, Promsintez and High Technology Initiation Systems, located in Samara oblast in southern Russia, in December 2024 (Euromaidan Press, July 24). Octogen is a high-quality explosive used in missile warheads, torpedoes, and rocket engines. India has also helped Russia acquire other high-tech equipment for military use, including Swiss-made precision tools, despite strict Western sanctions (EurAsian Times, February 10).

A research report released by the Economic Security Council of Ukraine (ESCU) revealed that “Russia has managed to purchase over 22,000 CNC (computer numerical control) machines, components, and consumables worth $18.2 billion between 2023 and the first seven months of 2024.” The CNC machines are essential for manufacturing weapons, and their procurement for Moscow has been critical to sustain its war effort against Ukraine. Before attacking Ukraine in 2022, Russia was dependent on imports for 70–90 percent of its CNC machinery, and despite strict sanctions, Russia managed to continue purchasing CNC machines due to the help extended by third countries such as India (ESCU, January 23)

Zelenskyy expressed his disappointment over Indian Prime Minister Narendra Modi’s visit to Moscow in July 2024. The visiting Modi was criticized for hugging Putin hours after Russia targeted a children’s hospital in Kyiv (Economic Times, July 11, 2024). That day, Zelenskyy, in a post on X, said:

In Ukraine today, 37 people were killed, three of whom were children, and 170 were injured, including 13 children, as a result of Russia’s brutal missile strike. A Russian missile struck the largest children’s hospital in Ukraine, targeting young cancer patients. Many were buried under the rubble. It is a huge disappointment and a devastating blow to peace efforts to see the leader of the world’s largest democracy hug the world’s most bloody criminal in Moscow on such a day (X/@ZelenskyyUa, July 8, 2024).

India, the world’s third-largest importer of oil, fully exploited the situation in the global oil market after some Western companies shunned buying Russian crude due to Russia’s invasion of Ukraine in 2022. India took advantage of the market situation by making a backdoor entry into the European market and reselling the Russian oil it had purchased at a discounted rate. India’s oil purchases from Russia played a key part in providing sanctioned Russia with financial fuel to sustain its war against Ukraine over the past three years. For example, India exported up to 75,000 barrels per day (bpd) of jet fuel to Europe during fiscal year 2023 (Al Jazeera, January 17, 2023; see EDM, April 27, 2023). Only two months after Russia’s invasion of Ukraine began in February 2022, Moscow became India’s fourth-largest oil provider, and more than a fifth of India’s overall oil imports in 2022 and 2023 came from Russia (see EDM, April 27, 2023).

India is currently under fire from the U.S. administration for its continued financial ties with Russia. On July 30, Trump first announced 25 percent tariffs on Indian goods shipped to the United States. A week later, he placed an additional 25 percent levy on India, in a move specifically targeting India’s Russian oil purchases (The White House, August 6). Peter Navarro,  trade adviser to the U.S. President, wrote in an article published in the Financial Times:

As Russia continues to hammer Ukraine, helped by India’s financial support, American (and European) taxpayers are then forced to spend tens of billions more to help Ukraine’s defense. Meanwhile, India keeps slamming the door on American exports through high tariffs and trade barriers. More than 300,000 soldiers and civilians have been killed, while [the North Atlantic Treaty Organization’s (NATO’s)] eastern flank grows more exposed and the West foots the bill for India’s oil laundering (Financial Times, August 18; Livemint, August 19).

The latest data on India’s oil purchase from Russia, however, shows that even after Trump’s tariff announcement in late July, India has continued to buy Russian crude oil. India’s import of Russian oil rose to 2 million bpd in August. Modi’s government did not ask Indian oil firms to slow on purchases from Moscow after Trump raised the overall tariff rate to 50 percent as a penalty for India’s continued imports of Russian oil. “Neither are we being told to buy nor told not to buy,” said Arvinder Singh Sahney, chairman of India’s largest oil company, Indian Oil Corporation (The Hindu, August 15).

India could push for a diplomatic settlement of Russia’s war against Ukraine, as it has been enjoying a close relationship with both the West and its long-time ally, Russia. India’s role, however, has not been that of a peacemaker, as it has preferred to pursue its own interests since the full-scale invasion of Ukraine by Russia in 2022. Despite being a member of the Quadrilateral Security Dialogue—along with the United States, Japan, and Australia—India did not condemn Russia’s aggression against Ukraine like the other members (The Print, February 29, 2022). Since 2022, India has sought to maintain ties with both Russia and the West.  The increased criticism from the West, however, suggests that India may soon have to choose a side.