It is good to see that a host of large Indian business houses and public sector enterprises have rapidly stepped up imports from Russia taking full advantage of hefty price discounts offered by Russian suppliers on a host of goods in the face of multiple trade sanctions from the NATO countries, European Union and their allies. Among the country’s top business leaders to step up imports from Russia are the Tatas, Mukesh Ambani-led Reliance Industries, Kumar Mangalam Birla-led UltraTech Cement, and Sajjan Jindal-led JSW Steel group, Saroj Poddar-led Chambal Fertilisers& Chemicals and Tony Fountain-led Nayara Energy (formerly Essar Petroleum). The latest move is saving Indian companies millions of dollars in import costs and benefiting the country in billions of dollars of foreign exchange outgo as imports are mostly Indian Rupee denominated.
Among the host of items being imported from Russia by Indian firms are petroleum, coal, fertilizer, and metals. Oil imports are greatly facilitated by Russia’s Rosneft, the single largest shareholder (49.13 percent) in Gujarat-based Nayara Energy Limited (formerly Essar Oil). The 20-million tonne annual capacity of Nayara’s refinery is located at Vadinar, near Dwarka, the home to one of the most complex refineries in the world. Most Indian oil companies are in touch with Rosneft, Russia’s biggest oil firm and the world’s 53rd largest public company as ranked by Forbes Global study. Its India connection has been of great help to large local oil firms, Including RIL and Indian Oil Corporation. Tony Fountain is well known in India’s oil industry. Before Nayara Energy, he had held various positions in British Petroleum, where he worked for around 25 years. He had also worked as a CEO with Nuclear Decommissioning Authority and with Reliance Industries Limited as CEO of Refinery & Marketing. Official reports show that India’s oil imports from Russia have jumped 50 times during this financial year. Russian oil accounts for 10 percent of its total oil import. Around 40 percent of imported Russian oil has been bought by private refiners – Reliance Industries and Rosneft-backed Nayara Energy. Before the Ukraine war, Russian oil made up for just 0.2 percent of all petroleum oil imported by India.
At a time when global energy prices practically zoomed to record levels, Russian oil is available at a huge discount. Indian oil refineries have merely taken advantage of discounted prices to ramp up oil imports from Russia. After the US and China, India is the world’s third-largest consumer of oil, around 86 percent of which is imported. Indian refiners are believed to have bought Russian crude at discount as high as USD 30 per barrel. Indian refiners are said to be negotiating mid-term oil import deals with Russian suppliers. India’s top public sector oil refiners, IOC, Bharat Petroleum, and Hindustan Petroleum are among those to negotiate with Rosneft. The volume and tenure of the deals could change depending on the discounts offered by Rosneft. In a way, after the US, Europe, Australia, and Japan piled economic sanctions on Russia, Indian firms rightly chose to import from Russia to fight artificial global scarcity and price hikes in the case of a host of essential goods that India has been importing year after year. In the first two months of the current financial year, over four percent of India’s total imports came from Russia, showing a four-time increase over the corresponding period in earlier years. India’s corporate sector deserves kudos for the action under compelling circumstances.
