Russia has sent India a list of 500 products it needs

Moscow has sent to India a list of more than 500 shippable products, which includes auto, aircraft and rail parts, four sources familiar with the matter said, as sanctions hurt Russia’s ability to keep viable industries running.

The list, a version of which has been seen by Reuters in New Delhi, is unofficial and it is unclear how many types of products will ultimately be exported and in what quantities, but a government source said the demand was unusual in its scope.

India is seeking to boost trade in this way, the source said, as it tries to reduce its ballooning trade deficit with Russia. Some companies, however, worry about being targeted by Western sanctions.

A source from the industry space in Moscowwho spoke on condition of anonymity because the matter is highly sensitive, said the Russian Ministry of Industry and Trade has asked major companies to draw up lists of spare parts and equipment they need.

The same source added that further discussions would be needed to agree on specifications and quantities and that this approach was not limited to India.

Russia’s industry and trade ministry and India’s foreign and trade ministries and the prime minister’s office did not immediately respond to requests for comment.

Russia made the demands weeks before Indian Foreign Minister Sumobrahman Jaishankar visited Moscow on November 7, two Indian sources said. It was not immediately clear what New Delhi conveyed to Russia during the visit

Prime Minister Narendra Modi’s government has not joined Western countries in openly criticizing Moscow over the war in Ukraine and has sharply increased purchases of Russian oil that have freed it from the effects of sanctions.

During his visit to Moscow, Jaishankar said that India needs to boost exports to Russia to balance the bilateral trade which is now leaning towards Russia.

He was accompanied on his visit by senior officials from agriculture, oil and gas, ports and shipping, finance, chemicals, fertilizers and trade, which he said shows the importance of India’s ties with Russia.

Paralysis by Western sanctions

Western sanctions have paralyzed supplies of some critical products to Russia.

Airlines face an acute shortage of spare parts because almost all planes are foreign-made. Auto parts are also in demand, with global automakers having abandoned the Russian market.

A source in Russia’s auto sales industry said the Commerce Ministry has sent a list of auto parts needed to corresponding ministries and government agencies in other countries, including India.

The list of items from Russia, which is almost 14 pages long, includes car engine parts such as pistons, oil pumps and ignition coils. There is also demand for bumpers, seat belts and the car infotainment system.

For aircraft and helicopters, Russia requested 41 types of products, including landing gear components, fuel systems, communication and fire-fighting systems, life jackets and aircraft tires.

The list also included raw materials for the production of paper, paper bags and consumer packaging, as well as materials and equipment for the production of textiles, including yarn and dyes, according to the document seen by Reuters.

Russian metals producers, such as nickel and palladium giant Nornickel, said Western sanctions and self-imposed sanctions by some suppliers have made it difficult for industrial companies to source imported equipment, parts, materials and technologies in 2022, which is a challenge to their development programs.

The catalog includes almost 200 types of metallurgy.

Russia has been India’s largest supplier of military equipment for decades and is the fourth largest market for Indian pharmaceuticals.

But with Russian oil purchases soaring and coal and fertilizer shipments also strong, India is looking for ways to balance trade, the first Indian government source said.

Indian imports from Russia have increased nearly five-fold to $29 billion in the period between February 24 and November 20 compared to $6 billion in the same period a year ago. Exports, meanwhile, fell to $1.9 billion from $2.4 billion, the source said.

India hopes to increase its exports to nearly $10 billion in the coming months with Russia’s list of demands, according to the government source.

However, some Indian companies are reluctant to export to Russia due to fear of Western sanctions, lack of clarity on payments and challenges in securing insurance.

“There is hesitancy among exporters… particularly on sanctioned items,” said Ajay Zahai, director general of the Federation of Indian Export Organizations (FIEO), a body backed by India’s commerce ministry.

Zahai, who is aware of Russia’s request, said even small- and medium-sized exporters who could meet some of the demands and had previously exported to Iran after Western sanctions were wary.

Big Indian lenders are also reluctant to handle direct rupee trades with Russia, months after the mechanism was put in place, for fear of sanctions.

RES-EMP

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