Economic policies: How Modi’s shrewd economic policies have changed the dynamics of Geo-Politics – Overdependence on Gulf in fuel procurement is a myth now – Modi’s strategic ‘Make in India’ initiatives provide the required fillip to give a boom to the indigenous manufacturing sector.
Since the day Russian President Vladimir Putin invaded Ukraine, the dynamics of the world have changed significantly and so has the geopolitical state of affairs for India.
The West, which holds a strategic partnership with India, tried to influence Modi-Govt to toe their line and be a part of their sanction-Russia camaraderie. India, however on its part, maintained a balanced approach and quite astutely paid attention to its interests. It took advantage of the adverse geo-political situation for Russia, and dig out a very lucrative trade opportunity, whereby Russian oil was offered to India at a highly discounted price. India furthered its economic ties with Russia by entering into a similar preferential deal for coal and fertilizers, too.
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India had been termed as a ‘Golden Sparrow’ from the good old times. But, very few have tried to define it in ‘strategic terms’. There are two reasons for that. First, from ancient times, mainland India happened to be the trade hub for the world with waters on its three sides. And second, there existed and we practiced a favourable ‘Balance of Payment’ system. We traded with our partners ensuring adequate protection and strength for our interests, Now, India is once again doing the same under the present government.
The economists, right from the 1st 5-year plan, made some strategic errors. Adequate impetus was not provided to the all-important manufacturing sector and the basic principle that no economy can survive in the long run without a robust manufacturing sector was largely disregarded.
Well, PM Modi has brought the system back in order with its ambitious Make-in-India campaign that has shown some early signs of propelling India to become self-reliant. In the global platform, the Make-in-India initiatives have not only gained prominence and credibility, but at the same time, it has also attracted enormous trade interests from various countries.
Increased bilateral Trade-Relations with Russia after the Ukraine invasion
Russia becomes India’s seventh-biggest trading partner
Fuelled by a surge in bilateral trade, Russia has now become India’s seventh-biggest trading partner. Last year, around the same time, Russia held the 25th position.
As per reports, in the last five months, between April and August, the bilateral trade has shot to an all-time high of $18,229 million. The annual bilateral trade has never touched that height in the last 3-4 years.
| Year | Bilateral Trade |
| 2021-22 | $13,124.68 million |
| 2020-21 | $8,141.26 million |
| 2019-20 | $10,110.68 million |
| 2018-19 | $8,229.91 million |
| 2017-18 | $10686.85 million |
In the recent past, India enhanced its import of oil and fuel items, which have accounted for 84% of India’s total imports from Russia. This has contributed up to $14,476.52 million in the trade as compared to last year’s $1,593.58 million. After oil, the second in the list is occupied with fertilizers which surged by 666.24% from $161.43 million to $1,236.96 million.
This is how India ended dominance of the Gulf on fuel by shifting its imports from Gulf to Russia
Prior to March 2022, India’s met its 85% of oil requirements through imports and 50% of it came from the Middle East (24% from Iraq, 18% from Saudi Arabia and 11% from UAE). With the beginning of the Russia-Ukraine crisis, the entire import scenario has changed considerably with Russia dethroning Saudi Arabia while becoming India’s 2nd biggest oil partner besides benefiting Indian coffer with reduced prices.
Crude Oil and Gold – India depended on the Middle East. Indo-Russia bonhomie has already rattled the Arabs as far as the oil trade is concerned. India has now begun to diversify its import sources in the matter of gold as well, while UAE accounted for a huge share in India’s gold imports, India, being the second largest gold consumer in the world, has begun diversifying its gold import to countries like South Africa and Switzerland, once again curtailing Gulf’s influence.
Gulf’s dependence on India
On the contrary, it is the Middle East itself which cannot survive without India. Oil does not satisfy hunger and can only be traded. 98% of the Middle East is arid and does not produce a single blade of grass It is India that exports almost everything available on its meal plate.
In the FY 2020-21, India exported nearly 24,00,000 metric tons of rice, 2,82,678 metric tons of wheat and more than 50 thousand tons of maize to the region. They also need India for fruits, dairy products, processed vegetables, and cereals, among other items. As the Gulf nations remain dependent on India for food, they must be having sleepless nights as India’s dependence on the Gulf is shifting globally.
Besides, while Rupay Cards and UPI making inroads in the Middle East, slowly and gradually India’s prudent economic policies are poised to make strong footholds in foreign lands.
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