Minister for Petroleum and Natural Gas Hardeep Singh Puri says the government feels no pressure on an impending price cap on Russian crude oil proposed by G-7
Driven largely by a surge in oil imports, Russia has emerged as India’s fifth largest trading partner during April-September, jumping from the 25th place at the end of the last financial year, official data showed.
The large shipments of oil and fertilizer have also meant that the trade deficit with Russia, pegged at just over $20 billion during the first half of the current financial year, is next only to China’s $44.6 billion.
In fact, among India’s top five trading partners, China and Russia are the only countries where exports have taken a beating during the first half of the year, when overall exports had grown by 17%.
The US and China have retained the top two spots (see graphic). Trade with the US rose 20% due to an increase in exports (15% to $41.5 billion) and imports (29% to $26 billion). In case of China, there has been a decrease in exports of copper, cotton and ores among the major commodities, resulting in India’s shipments to its neighbor falling 36.6% to $7.8 billion, while imports have shot up 23.6% to over $52.4 billion during this period.
Disaggregated data released by the commerce department showed that India’s exports to Russia fell 19% to $1.3 billion during the first half of the current financial year. In contrast, imports surged five times from $4.2 billion during April-September 2021 to $21.3 billion in the first half of FY23. During this period, the value of Russian oil shipped to the country soared 8.3 times to nearly $18 billion, while fertilizer saw an even higher jump.
The government has let oil companies buy more crude from Russia, which emerged as the biggest source for Indian crude in October, despite pressure from the US and other countries to stop imports after the war in Ukraine started in February.
Foreign minister S Jaishankar and oil minister Hardeep Puri have maintained that India will keep giving top priority to securing its interests, even as FM Nirmala Sitharaman has said that purchase of Russian crude has helped manage inflation.
Union Minister for Petroleum and Natural Gas Hardeep Singh Puri has said that the incumbent government feels no pressure on an impending price cap on Russian crude oil proposed by the G-7, the group of seven advanced countries.
“We will see it when it happens. The Modi government feels no pressure. I have no fear or anxiety. The market will deal with the logistics issue if it arises. Whatever happens, will be dealt with,” Puri responded to reporters on being asked about the price cap mechanism on Russian crude oil proposed by G7 nations starting December 5. Minister Puri made the remarks at a press conference on the sidelines of World LPG Week 2022 held in Greater Noida on Wednesday.
On September 2, the G7 countries agreed to future implementation of a price cap on oil exports from Russia to limit its largest source of income.
According to the G7 decision, transportation services such as shipping and insurance will be allowed for oil exports from Russia only if oil is purchased below or at the price cap. As per reports, G7 nations are still fine-tuning the details of the price cap ahead of the December 5 timeline.
Puri had last month in Washington after his bilateral meeting with US energy secretary Jennifer Granholm stated that the Indian government has a moral duty to provide energy to its citizens and it will continue to buy oil from wherever it has to.
In an interview with CNN, the minister had also reiterated that India is under no moral conflict to stop buying oil from Russia. Puri also defended India’s purchases stating that India only bought 0.2 per cent, not 2 per cent of Russian oil and it buys in a quarter what Europe buys in one afternoon.