India–Russia Energy Partnership

General Studies Paper II: Bilateral Groupings & Agreements

Why in News?

Recently, Russia has offered to steadily increase crude oil and LNG supplies to India amid global energy disruptions caused by the West Asia crisis, aiming to strengthen bilateral energy cooperation.

Energy Trade between India and Russia

- Historical Ties: The India–Russia energy partnership is rooted in Cold War–era cooperation, evolving into a “Special and Privileged Strategic Partnership” over 25 years.
  - The landmark development of Kudankulam Nuclear Power Plant institutionalized long-term collaboration between two countries, which expanded into oil, gas, and hydrocarbons, evolving into a multi-sector strategic energy alliance.
  - Post-2014 Crimea crisis and especially after the 2022 Ukraine crisis, energy ties deepened significantly as India increased reliance on discounted Russian crude oil.
- Russian Oil: Russia has emerged as India’s largest crude supplier since June 2022, accounting for nearly 35% of total imports by FY2025, up from just 2% in FY2020.
  - In absolute terms, India imported 240 million tonnes of crude in 2024, with Russia contributing a 36.4% major share, reflecting rapid diversification away from traditional suppliers like OPEC.
  - India’s imports of Russian crude have grown at a remarkable CAGR of 96% (FY2020–FY2025), indicating one of the fastest shifts in global energy trade patterns.
  - Daily imports averaged around 1.7–2.0 million barrels per day in 2025, with peaks crossing 2.08 million bpd, demonstrating strong and sustained demand from Indian refiners.
  - Recent disruptions, especially in West Asia and the Strait of Hormuz, have reinforced this partnership. In March 2026, India’s Russian oil imports surged by 90% month-on-month, following a period of reduced buying in late 2025 and was facilitated by a 30-day US waiver granted on March 5, 2026.
- LNG Cooperation: LNG trade between India and Russia remained limited, with India relying more on Qatar and Australia. In 2012, Gazprom and GAIL India signed a 20-year deal for 2.5 million tonnes per annum (MTPA) of LNG.
  - India received its first direct shipment of Russian LNG from the Yamal project in October 2021. In 2024, India imported approximately 44,162 metric tonnes ($68.9 million) from Russia.
  - Globally, Russia’s LNG exports rose by 8.9% in early 2026, indicating surplus capacity for Asian markets. For India, LNG is critical as it imports nearly 50% of its gas needs, making Russia a key future supplier.
  - Russia has expressed strong intent to expand LNG exports to India, aligning with India’s goal of increasing the share of natural gas in its energy mix to 15% by 2030.

Hydrocarbons: India imports a broad hydrocarbon basket from Russia, including coal, vacuum gas oil (VGO) and refined petroleum products. In November 2025, crude constituted 79% of imports, followed by coal (€457 million) and oil products (€236 million).

- In 2024, India’s imports of Russian coal rose to a record 27 million tonnes, representing a 10.8% share of India’s total coal imports.
- In the first half of 2025, thermal coal imports from Russia jumped 33% year-on-year to 4.3 million tonnes.
- Monthly coal imports from Russia were valued at approximately €442 million ($473 million) in early 2026.

Role of India–Russia Energy Ties in Strengthening India’s Energy Security

Strategic Necessity: India imports 80% of its crude oil needs, making external partnerships critical. The India–Russia energy partnership reduces vulnerability by ensuring stable long-term supply, especially as domestic production declined by 26% over the past decade, reinforcing dependence on imports.
Cushion Against Supply Shocks: The partnership provides resilience against disruptions like West Asia conflicts and Strait of Hormuz risks, from where India sourced 48.7% crude and 68.4% LNG in 2025. Russian supplies act as a geopolitical hedge, ensuring continuity during crises.
Cost Advantage: Discounted Russian crude significantly lowered India’s import bill, helping manage fuel inflation and fiscal stability. This aligns with India’s strategy of market-driven procurement, where refiners prioritize price, availability, and risk diversification.
Export Capacity: Access to affordable Russian crude boosted India’s refining sector, enabling it to become a major petroleum exporter. India exported up to 50% of aviation fuel and 30% petrol output globally, enhancing its role in global energy markets.
Autonomy in Energy Diplomacy: India’s continued engagement with Russia reflects its doctrine of strategic autonomy, balancing ties with the US, OPEC, and Russia. Energy decisions remain commercially driven, insulating India from geopolitical pressure.
Long-Term Energy Transition: The partnership supports India’s transition strategy by freeing fiscal space for investments in renewables, ethanol (20% blending achieved in 2025), and EV expansion targets (30% by 2030).

Challenges in India–Russia Energy Partnership

- Geopolitical Pressure: The biggest challenge arises from U.S. and EU sanctions on Russian oil, including tariffs and restrictions. The U.S. imposed up to 25% tariffs on Indian exports, which forced Indian refiners to reassess imports, sometimes leading to declines in Russian oil share.
- Financial Constraints: Energy trade faces hurdles due to restricted global payment systems, especially with Russian banks excluded from SWIFT. This has led to complex arrangements like rupee–ruble trade and third-party intermediaries, increasing transaction costs and cash flow vulnerabilities.
- Insurance and Logistics Challenges: Sanctions have disrupted shipping and insurance services, forcing reliance on a “shadow fleet” and non-Western insurers. These opaque logistics chains raise compliance risks, higher freight costs, and potential supply disruptions, impacting the reliability of the partnership.
- Risk of Overdependence: Heavy reliance on Russia—reaching over one-third of India’s oil imports in recent years—raises concerns about overdependence on a single supplier. This contradicts India’s diversification strategy, pushing to rebalance imports toward OPEC and other sources.

Operational Challenges: Russia-linked entities like Nayara Energy face disruptions, including termination of shipping contracts, IT service suspensions, and export constraints, affecting refining and distribution operations in India.

India’s Energy Supply Strategy:

Multi Source: India’s core policy focuses on diversifying crude oil imports across multiple countries to avoid overdependence. By 2026, India sources oil from over 41 countries, compared to 27 earlier, ensuring supply resilience and flexibility.
- - Government shifted its crude sourcing to mitigate geopolitical risks, notably reducing West Asian dependence from 60% to below 45% by 2025.
  - Sourcing is also expanding into Africa (Nigeria, Angola) and Latin America (Brazil, Mexico) to bypass chokepoints.
Gas-Based Economy: The National Gas Grid has expanded to over 25,400 km, achieving nearly 100% geographical coverage for City Gas Distribution (CGD).
Policies like the Unified Pipeline Tariff (2023) and the Natural Gas Infrastructure Order (2026) streamline pipeline expansion to replace expensive LPG imports.
Non-Fossil Capacity: The government achieved its 50% non-fossil fuel capacity target ahead of schedule in late 2025, reaching 235.7 GW of installed renewable power.
Under the National Green Hydrogen Mission, India targets 5 MMT annual production by 2030 to reduce fossil imports by over ₹1 lakh crore.
The Draft National Electricity Policy 2026 further incentivizes private investment in small modular reactors to reach 100 GW nuclear capacity by 2047.