How India Can Secure Russian Oil Amid Sanctions
A Simple Choice for India
India buys a lot of oil. Oil is like the blood of the economy (Russian Oil). Before the war in Ukraine, India bought very little oil from Russia. It was less than one percent.
The world changed after the war started. Western countries put many rules, called sanctions, on Russia. These rules made it hard for Russia to sell its oil to Europe and the US.
Because of this, Russia needed new buyers. India saw a chance. Russia offered a very good deal: cheap, discounted oil. India is always looking for cheap energy. It is an economic choice. India’s leaders say they must put the country’s needs first. This is why India started buying much more Russian oil.
Why Cheap Oil is So Important Russian Oil
India is one of the world’s biggest buyers of oil. It needs oil for its cars, trucks, and factories. Cheap oil helps keep prices low inside India. This helps families and businesses.
When oil prices go up, everything costs more. This is called inflation. The government wants to stop high inflation. Buying cheap Russian oil helps a lot. It makes the energy supply safe and steady for India. This is called energy security. India says this choice is just business. It is not about taking sides in the war.
The Big Plan: How India Pays for Oil
Paying for the oil is the tricky part. The US Dollar is the world’s main money for oil. But sanctions make using the US Dollar for Russian trade hard.
India and Russia found a simple way. They pay in their own money. This is called a local currency settlement.
- India pays Russia in Indian Rupees.
- Russia pays India in Russian Roubles.
This system helps them skip the banks and money rules of the West. It keeps the oil trade running smoothly.
Special Bank Accounts for Trade Russian Oil
India’s banks set up Special Rupee Vostro Accounts. Think of these as special bank boxes. Russian oil companies put the Rupees they get from selling oil into these boxes.
The problem is the trade is not even. India buys a lot more oil from Russia than Russia buys from India. This means Russia ends up with a lot of Rupees in Indian banks. Russia cannot use all these Rupees right now.
To fix this, Russia can use this money for a few things:
- Buy more goods from India, like tea, clothes, and medicine.
- Invest in projects inside India.
- Buy Indian government bonds.
Both countries are trying to make this payment system work better and faster. They are even looking at linking their digital payment networks. India has RuPay. Russia has Mir. Linking them would make trade even easier.
Avoiding the Sanctions and Price Caps
The G7 group of rich countries, like the US and UK, put a price cap on Russian oil. This cap says that Western companies cannot help ship or insure Russian oil if it sells for more than $60 per barrel.
India has a plan for this, too.
- Buying Below the Cap: India mostly buys the oil at a price below the $60 cap. This keeps the trade legal under the Western rules. The big discounts Russia offers help here.
- Using Different Ships: If the price is too high, India uses a ‘dark fleet’ of ships. This fleet is made up of older tankers. These ships are often outside Western insurance and shipping rules. They help move the oil without needing Western services. Ship-to-ship transfers also help hide where the oil came from.
- National Interest: India openly says it must buy oil where it is cheapest. They say they are not breaking any direct sanctions. The US and EU did not put direct sanctions on Russian oil itself. They only put rules on shipping and insurance. India works around these rules.
A Steady Partnership Russian Oil
India and Russia have been partners for a long time. This partnership is about more than just oil. Russia is a major supplier of military weapons to India. This history makes the oil deal a strong part of their bond.
Both countries want to see their total trade grow a lot more. They want to double their trade value in the next few years. This goal is set to be reached by 2030. Oil is the key part of this goal.
India also buys other Russian things. These include coal, fertiliser, and military parts. Russia is also a big partner in India’s nuclear power plans. The two countries are making their partnership stronger across many areas.
The Future of the Oil Trade
The price of Russian oil goes up and down. When the discounts get smaller, Indian companies sometimes buy less. But the long-term plan is still to buy oil from Russia.
The Western countries still try to make the trade harder. They have put new rules on some Russian oil companies. But India’s stand is clear: national interest rules.
- India needs cheap energy.
- The trade helps keep prices low.
- India has worked out a payment system that avoids the US Dollar.
As long as Russia offers a good price, India will keep buying. India’s strategy is smart and simple. It helps India’s economy and keeps its energy supply safe. This plan shows the world that India will make its own choices about its energy needs. The special way of buying oil is a success story for India’s foreign policy.
Buying Russian Oil.
India has a clear way to keep buying Russian oil. This plan is based on getting good prices and making safe payments. The use of Rupees and Roubles is a clever way to handle the payment issue. The cheap oil helps the Indian economy and its people. This keeps the country’s energy needs secure. India will continue to buy oil based on its own needs and for the benefit of its people. This is how India deals with the world’s changing rules.
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