New Delhi has avoided condemning Putin’s grinding invasion of Ukraine as it needs Russian weapons – one of its biggest sources of arms. India, along with China, has already been snapping up cheap Russian crude that’s then processed by domestic refiners including Reliance Industries, taking advantage of discounted barrels as global prices soar.

Indian retailers are also in talks to open stores in Russia, President Vladimir Putin told a BRICS business forum last week, adding that oil flows to the top two Asian consumers are “growing noticeably”, defying Western pressure to cut off trade with Moscow.

For Indian companies, the chance to grab a bigger slice of the Russian market is alluring despite the risk of a global backlash after corporate giants like Apple, Ikea and Fast Retailing shuttered stores or paused sales in Russia. 

“We’ll be going very aggressively to convert those opportunities into orders,” said Rajneesh Chopra, global head of business development at VA Tech Wabag Ltd., a Chennai-based builder of water and sewage treatment plants that secured a Russian order worth €18 million in June. Chopra said its European rivals have put their Russian projects on hold, prompting clients to look for alternatives. 

‘Silver lining’

Srijit Dasgupta, the chief financial officer of Berger Paints India, said last month he saw “significant opportunity” in Russia as multinational paint companies pull out. Russia is also a key medium-term growth area for Dr Reddy’s Laboratories, one of India’s largest pharmaceutical companies, Saion Mukherjee, a Mumbai-based analyst at Nomura Holdings, wrote in a report last week following an investor meeting held by the firm.

“The company has a basket of 40 products and a large front-end presence” of more than 800 employees in Russia, Mukherjee wrote. “A silver lining of the current geopolitical conflict is the opportunity to gain market share in Russia.” 

A spokesperson for Dr Reddy’s forwarded on recent publicly available management commentary that said the company was looking further at the Russian market. They declined to comment further. 

Coffee-exporter CCL Products India has already received requests from many European competitors, who are unable to ship directly due to sanctions, to execute contracts to Russia on their behalf, managing director Challa Srishant said in an interview. The company is looking to expand sales in Russia and its renewed pitch to clients now emphasizes the reduced risk by shifting procurement to India, he said.

X5 Group, Russia’s biggest food retailer, also plans to increase the supply of Indian goods, such as drinks, canned food, kitchenware, seafood and rice, according to Artem Pereslavtsev, managing director of X5 Import. Company executives visited India in April and held meetings with Indian suppliers the following month, Pereslavtsev said.

Limited trade

Still, Indian companies and banks run the risk of reputational damage and many will likely think twice before transacting with sanctioned Russian entities, according to Akhil Bery, a director at the Asia Society Policy Institute. 

Infosys, the Bengaluru-headquartered software giant, pulled out of Russia in April following a furore over the tax arrangements of Akshata Murty, the wife of British Chancellor Rishi Sunak and daughter of Infosys’ billionaire founder. That led to accusations that Murty’s 0.91% shareholding in Infosys meant she was capitalising off Russia after her husband called for companies to divest from the country.

“Though this was a unique case, it does highlight the reputational risks a company can incur if it is seen as profiting from Russia’s invasion of Ukraine,” Bery said. “For India, it has withstood US pressure over sanctions, but there is growing consternation in the US about India’s increased purchases of Russian oil, even if at a discount.”

India’s government has held firm, repeatedly pointing at the hypocrisy of Western countries that continue to rely on Russian energy imports. With long-standing friendly relations between New Delhi and Moscow, fostered in part by India’s socialist tilt toward the Soviet Union during the Cold War, trade between the two countries hit a record of $13 billion last year, though Russia still ranks below India’s top 20 trading partners. 

As such, there is a keen interest to add new sectors and products to the basket of goods traded between the two countries, including telecom and IT hardware, auto components, and wellness products, according to Rohit Sharma, a director at the Federation of Indian Chambers of Commerce and Industry lobby group.

Those looking at Russia still face the major hurdle of cross-border payments. A planned rupee-ruble mechanism to import oil was dropped after extreme volatility in the Russian currency. Instead India is now considering a proposal to settle payments in rupees. 

That obstacle hasn’t stopped Indian companies, particularly ones that don’t have a large presence in Western markets, from sniffing out prospects in Russia. “Definitely we’re putting ourselves on the door and trying to see what we can do,” Wabag’s Chopra said. BM