Cornered by Western sanctions, Russia is selling resources at rock bottom prices to other parts of the world. India is in a position to do the same when Russian President Vladimir Putin comes for his state visit this week — if New Delhi negotiates properly.
“Everything is on offer, but India has to determine what it wants,” says Nandan Unnikrishnan, senior fellow and head of Eurasian studies of the Observer Research Foundation.
Russia struck a deal a few days ago with Turkey for natural gas that the European Union spurned, but Ankara got a 6% discount on the already low EU price — some reports say final price was lesser.
Beijing had earlier forced Moscow to accept gas prices that Russia rejected a few years ago. China has also received a 25% price reduction in potash shipments, a key fertiliser ingredient. India and China are the primary importers of Russian potash.
The biggest deal Prime Minister Narendra Modi seems set to strike with Putin, say a number of sources, is for diamonds. Here, New Delhi’s success lies not in prices but in concluding a deal in the first place.
The Putin state visit is expected to lead to Alrosa, the Russian consortium that is collectively the world’s largest diamond producer, agreeing to directly deliver rough diamonds to Indian firms, many centred in Gujarat. Direct shipments would save Indian firms somewhere in the region of `70 to 80 billion a year, say industry estimates.
“Putin will attend the World Diamond Conference as part of this,” says Tatiana Shaumian, head of the Centre for Indian Studies, in Moscow’s Institute of Oriental Studies. “The diamond trade has a great future between the two countries.”
It helps India’s gem industry has grown large enough for Alrosa to pay attention. “In the past, when state-owned MMTC was the main buyer, the offtake was in the $100 million region. Today, we are probably capable of over one billion dollars,” Unnikrishnan said.
India has also sought lower potash prices. However, these waters have been muddied by a breakdown of a Russian and Belarussian duopoly. India will be looking for a longer-term agreement and possibly equity shares in some of the smaller Russian potash firms.