Economy of India

New Delhi approves mega port to boost Russia-India trade, 08.02.2024.

The facility is meant to become a vital part of the International North-South Transportation Corridor for shipping goods via Iran.

The Indian government has approved a proposal for building a large port on its western coast to connect it with major global trade networks and boost trade with Russia, New Delhi announced on Friday.

The port, to be built in Vadhavan in the Maharashtra state, would aid trade flow through the International North-South Transportation Corridor (INSTC) and the India Middle East Europe Economic Corridor (IMEEC), according to the announcement.

Proposed in 2000, the 7,200km-long INSTC was meant to transport goods from India to Russia via Iran as an alternative to the conventional Suez Canal route. However, the INSTC has yet to be fully implemented. The conduit has once again assumed significance in view of a sharp spike in trade between India and Russia.

During his visit to Moscow in July, Indian Prime Minister Narendra Modi stressed the importance of improving connectivity with Russia, which would mean developing the INSTC. The two countries have set a trade target of $100 billion by 2030.

An agreement for the IMEEC corridor, which aims to improve connectivity and economic integration between Asia, the Persian Gulf, and Europe, was signed last year at the G20 summit held in New Delhi. However, the project has run into delays due to the conflict between Israel and militants in Gaza.

Including the acquisition of land, the Vadhavan port would cost 76,220 rupees ($9 billion), Indian Ports, Shipping and Waterways Minister Sarbananda Sonowal told Parliament on Friday.

The port will be developed through a public-private partnership led by the Jawaharlal Nehru Port Authority and Maharashtra Maritime Board, according to Sonowal, who expects the project to create one million jobs.

The facility will handle 15 million TEU (twenty equivalent unit) containers after the first phase of construction is complete and 23.2 million TEUs after the commissioning of its second phase, the official told The Hindu Businessline in February.

Once completed, the port would rank among the world’s ten biggest container ports, according to The Economic Times, and is expected to be operational by 2030. The Indian government currently operates 12 major ports across the country.

https://www.rt.com/india/602059-india-port-russia-trade/

India’s biggest company planning big swap with Venezuela – Reuters, 08.09.2024.

Washington has given Reliance Industries its approval to restart oil transactions with the sanctioned South American nation.

India’s Reliance Industries is planning to pay for Venezuelan oil partly with naphtha supplies and partly with US dollars after obtaining Washington’s approval to resume oil trade with the sanctioned nation, Reuters reported on Thursday, citing sources familiar with the matter.

Reliance, which is owned by India’s richest man Mukesh Ambani, operates the world’s biggest refining complex in Gujarat state.

Venezuela’s proven oil reserves are recognized as the largest in the world. With an estimated 303 billion barrels, the country accounts for approximately 17% of global crude oil reserves, according to the International Energy Agency (IEA). However, its energy sector has experienced severe jolts in recent years due to international sanctions and the economic crisis. Caracas has been the subject of US restrictions for over 15 years.

Reliance was forced to stop buying oil directly from Venezuela in April due to the reimposition of sanctions. However, the company submitted a request to the US to resume imports of crude from Venezuela in May. The Indian firm was authorized to resume its purchases in July, according to Reuters.

Two oil refineries owned by Reliance can process 1.4 million barrels per day (bpd) of crude oil and have the technology to process cheaper and heavier crudes, such as Merey from Venezuela. Caracas needs naphtha, which is primarily produced in North America, to dilute its heavy crude.

Oil from Venezuela is among the cheapest for India’s oil refiners, with the average cost reported at $60.60 a barrel in January this year.

In 2023, Washington granted a broad license to Venezuela’s oil industry, allowing state-run PDVSA to export to its chosen markets. In 2023, India was among the main destinations for Venezuelan crude oil exports, with an average supply of 5,000 barrels per day, according to German data-gathering firm Statista. Reliance received 2 million barrels of Venezuelan oil last June, Reuters reported, citing data from analytics firm Kpler.

India’s top explorer Oil and Natural Gas Corp (ONGC.NS) holds a 40% stake in the San Cristobal field in eastern Venezuela’s Orinoco Heavy Oil belt, with the state oil company PDVSA holding the remainder. In January, Reuters reported that Venezuela had agreed to give some oil to ONGC with a view to recouping its pending $600 million dividend.

https://www.rt.com/india/602374-reliance-oil-venezuela-deal/

India's exports to Russia hit historic high, 08.25.2024.

MOSCOW, August 25 - RIA Novosti. Indian exports to Russia in June reached a record 475 million dollars, increasing almost one and a half times in a year, according to a RIA Novosti analysis of data from the Indian Ministry of Trade and Industry.
Thus, if at the beginning of summer Indian companies exported goods to Russia for 475 million dollars, then a year earlier - for 328 million. This became a new maximum for deliveries from this country - the previous peak occurred in March of this year (441 million dollars).

At the same time, Russian business sales to India also grew by 18% over the year, to $6 billion. The monthly figure was higher only twice - in May 2023 and in May 2024. As a result, mutual trade between the two countries grew by 20% year-on-year, to $6.4 billion. This became the second result in modern history after the late spring record of $7.5 billion.

At the same time, in the first half of this year, supplies from Russia to India grew by 13% - to 35.8 billion dollars. Only China has more , from where goods worth 50.4 billion dollars were exported to India. And the export of Indian goods since the beginning of the year has increased by a quarter - to 2.5 billion dollars.

Russia remains the 29th largest recipient of Indian products.

The top five importers of Indian goods are the US ($41.6 billion), the UAE ($19.7 billion), the Netherlands ($14 billion), Singapore ($9 billion), and China ($8.5 billion).

Thus, trade turnover between Russia and India for January-June increased by 14% - to 38.3 billion dollars, which is 58% of trade for the entire last year.

https://ria.ru/20240825/eksport-1968312446.html

Indian fuel exports to Europe surge 2,500 times – report, 09.02.2024.

European countries are turning to New Delhi for petrochemicals after US-led sanctions cut them off from Russian energy supplies.

India’s exports of refined oil products to Europe have surged by 2,539 times since 2018, according to news website The Print, citing data from the Ministry of Commerce and Industry.

The dramatic increase is attributed to post-Covid-19 supply chain challenges in Europe and India’s heightened imports of discounted Russian crude oil following the outbreak of the Ukraine conflict.

In the 2018-2019 financial year, European countries (including Russia) imported 9,740 metric tons of petrochemicals from India. By 2023-2024, the figure had skyrocketed to 24.73 million tons. In terms of value, exports grew by 3.5 times, from $5.9 billion in 2018-2019 to $20.5 billion in 2023-2024.

The Netherlands emerged as the leader among 17 European importer nations, purchasing 24.73 million tons of fuel from India in 2023-2024. With shipments via Rotterdam, Europe’s largest seaport, the Netherlands serves as a key supplier to markets across the region.

The export volume of India’s petroleum products to Europe began to surge during the Covid-19 pandemic in 2020-21 as Indian refiners bought cheap crude and sold value-added fuel, mostly diesel, an unnamed industry leader told The Print.

Demand spiked again in 2022, after the outbreak of the Russia-Ukraine conflict and imposition of sweeping sanctions on Moscow by the US and its allies.

India has not supported the sanctions despite pressure from Western partners, and has ramped up its purchases of Russian oil, recently overtaking China as Moscow’ s largest buyer. In the financial year 2022-2023, Indian exports to Europe surged to nearly 17 million tons, valued at $16.3 billion, establishing New Delhi as a leading exporter of refined fuels to the region.

Indian officials have repeatedly stated that the country’s decision to buy Russian oil, despite Western pressure, has helped prevent a global energy crisis. Petroleum Minister Hardeep Singh Puri emphasized in a recent interview with RT that without Russian oil on the market, global prices would have hit $250-$300 per barrel.

Russian oil exports to India peaked in July 2023, and recent data indicate a 14.5% decline in August, dropping to 1.80 million barrels per day (bpd) due to maintenance shutdowns at some refineries and diminished demand. Overall oil imports also fell accordingly, with Russian crude still constituting 39.9% of India’s oil imports for the month. An uptick is expected in October in anticipation of India’s festival season.

Trade between India and Russia rose to around $65 billion last year, largely on the back of Indian purchases of Russian oil.

https://www.rt.com/india/603393-indian-fuel-exports-to-europe/

India considering Russian SWIFT alternative for trade settlements – media, 09.03.2024.

The banking regulator is reportedly interested in joining Russia’s financial messaging system in the push towards de-dollarization.

The Reserve Bank of India (RBI) is considering the use of Russia’s alternative to the Western SWIFT financial messaging system for rupee-ruble trade settlements, Business Line has reported.

The System for Transfer of Financial Messages (SPFS) was set up by the Russian central bank after the country was cut off from the Belgium-based SWIFT network as part of Ukraine-related sanctions.

According to the report on Tuesday, while discussions with financial institutions are ongoing, India’s banking regulator considers the SPFS a good way of making trade settlements more expedient for both countries.

“There have been meetings between senior officials from the RBI and some public sector banks with their counterparts in Russia on the country’s proposed alternative messaging system for banks. There is a view in the RBI that the proposal is doable,” a source familiar with the discussions told Business Line.

"For national currency trade settlements and quick pay to be more efficient, it is important to have a new transaction facilitating mechanism… Direct settlements in national currencies will not only help in de-dollarization but also lead to cheaper, quicker and more efficient transactions.”

The source noted, however, that the RBI considers the matter “a diplomatically sensitive issue” due to sanctions placed on many leading financial institutions in Russia and the SPFS system itself.

A host of Russian banks found themselves on Western sanctions blacklists following the outbreak of the Russia-Ukraine conflict in early 2022. The SPFS was also targeted by EU restrictions in late June, when Brussels banned the bloc’s banks from using the system or doing business with non-Russian third-country banks connected to it.

With that in mind, the RBI reportedly wants more time to analyze the possible risks of using the SPFS, as it could be interpreted as an attempt to circumvent Western sanctions on Russian banks and put Indian institutions in danger of secondary restrictions.

Discussions regarding the use of the SPFS in trade comes amid Russo-Indian efforts to cut reliance on Western money and boost the use of national currencies in bilateral trade. According to an Economic Times report last month, the two countries have been exploring the idea of creating a national currency settlement system to start direct rupee-ruble trade. Under the mechanism, the countries’ central banks would set a direct rupee-ruble exchange rate instead of pegging it against the US dollar. The move is expected to help Moscow and New Delhi overcome trade barriers created by Western sanctions.

https://www.rt.com/india/603438-russian-swift-india-settlements/