Russia built covert trade channel with India, leaks reveal, 4 September 2024

Russia has been secretly acquiring sensitive goods in India and explored building facilities in the country to secure components for its war effort, according to Russian state correspondence seen by the Financial Times.

Moscow’s industry and trade ministry, which oversees defence production to support Vladimir Putin’s full-scale invasion of Ukraine, drew up confidential plans in October 2022 to spend about Rs82bn ($1bn at the time) on securing critical electronics through channels hidden from western governments.

The plan, revealed in letters to a shadowy trade promotion body with strong links to the Russian security services, aimed to use “significant reserves” of rupees amassed by Russian banks from booming oil sales to India. It saw India as an alternative market to source crucial goods “previously supplied from unfriendly countries”.

Russia and its Indian partners targeted dual-use technologies - goods with both civilian and military applications - that are subject to western export controls, according to the documents, as well as western officials and two businessmen formerly involved in the trade. Moscow even envisaged pumping investment into Russo-Indian electronics development and production facilities, according to the leaked files...

India’s ties with Moscow have been a growing source of friction with Washington. Wally Adeyemo, the US deputy treasury secretary, wrote in July to three of India’s top business organisations warning them that “any foreign financial institution that does business with Russia’s military industrial base risks being sanctioned itself”.

Adeyemo added: “This heightened sanctions risk exists regardless of the currency used in a transaction”...

India has been a major buyer of Russian crude oil and the two countries’ total trade reached an all-time high of $66bn in the 2023-24 financial year, a fivefold increase on the past year before the invasion. Some of the trade has been transacted in rupees, leaving Russia with a surplus of the currency...