Russia’s Rising Role in India’s Neighbourhood First Policy

India-Russia relations go beyond just arms, oil, and China: New Delhi and Moscow are also engaging in South Asia.

Modi’s July 8th visit to Moscow marked the first bilateral visit of his third term, signalling the continued importance of the relationship. This was his first trip to Moscow since 2015 and the first India-Russia summit since the Ukraine war.

Going by the text of the rather bland joint statement, with few high-visibility deliverables, one may be tempted to term the visit as a failure. At best, this would suggest continuity of a plateauing relationship, driven by mere tactical interests to sustain defence ties, energy trade, and strategic signalling to China.

Both sides have been able to convert their high levels of trust into new areas of co-operation in countries such as Sri Lanka or Bangladesh, at the heart of the Indo-Pacific.

Yet going beyond the text, a closer examination of the India-Russia relationship in recent years shows how New Delhi and Moscow have been fleshing out new areas of co-operation in South Asia–India’s traditional sphere of influence. Much of this remains under the radar but it indicates how both sides have been able to convert their high levels of trust into new areas of co-operation in countries such as Sri Lanka or Bangladesh, at the heart of the Indo-Pacific.

How Many Pillars to the Partnership?

There has been a lively debate on what role Russia plays in India’s evolving strategic balance. For some, this is a relationship based on “mutual trust” and respect that continues to hold much promise for India and requires more, not less attention and investment – whether for New Delhi to symbolically demonstrate its strategic autonomy or to insure against possible over-reliance on the United States. For others, this is a plateauing, declining, or increasingly transactional partnership with growing limitations, suggesting that New Delhi tends to overrate Russia’s importance at the risk of complicating its convergence with the United States and other Western powers.

Common to most of the analysis on Russia-India relations, however, is the restrictive tendency to focus on only three pillars: arms, energy, and China. In one rather popular perspective, the India-Russia relationship is now reduced to a “single pillar” of defence co-operation and arms trade, albeit Moscow’s share in India’s arsenal is declining.

A second, economic pillar has also garnered much attention. Bilateral trade has boomed with Russian imports reaching nearly $65 billion (up from $11 billion in 2021), but the hard reality is that energy makes up roughly 85% of total trade. To put the economic dimension in context, India exports four times more to Bangladesh, seven times more to the Netherlands, and over twenty times more to the US than to Russia.

Finally, there is the highly debated geostrategic pillar and how Russia fits (or not) in Delhi’s evolving role in the US-India-China triangle. Given that India’s relations with China remain frozen and the convergence with the United States continues steadfast, Modi’s visit has been chalked up as a way to counter growing China-Russia bonds. Yet nobody in Delhi is under the illusion that a single visit will reverse the ‘No Limits Partnership’ between Moscow and Beijing.

This focus on defence, energy, and China risks blinding us to other, lesser-known dimensions of the relationship where India and Russia are seeking to broaden their bilateral ties. There is significant evidence that New Delhi and Moscow have been working towards bolstering regional and global pillars of co-operation.

For example, India and Russia are working together to set up alternative multilateral organisations such as BRICS, including the New Development Bank (NDB) and alternative finance and trade mechanisms to circumvent the US-led sanctions systems. To pursue its security interests in Central Asia, India has joined the Shanghai Cooperation Organization with Russian support and continues to work closely with Moscow on global counterterrorism. In Afghanistan after 2021, both countries have aligned positions and deepened security consultations. India and Russia are also deepening their co-operation on space exploration and in the Arctic.

Meeting Ground South Asia

One specific area to watch out for is the extent to which Russia has been consulting, coordinating, or co-operating with India in other countries in South Asia, barring Pakistan, of course. Successive Indian governments have defined this geographic periphery as their top strategic priority: for India this is a critical sphere of influence akin to Russia’s Near Abroad. Not surprisingly, there are significant parallels between Indian thinking on Bangladesh, Nepal, or Sri Lanka and Russia’s approach to Ukraine, Georgia, or Uzbekistan.

There are significant parallels between Indian thinking on Bangladesh, Nepal, or Sri Lanka and Russia’s approach to Ukraine, Georgia, or Uzbekistan.

In hosting the leaders of India’s smaller neighbour countries for his inauguration in the month of June, Modi reaffirmed the centrality of his ‘Neighbourhood First Policy.’ Strengthening these relationships is vital at a time when the ‘India Out’ campaign in the Maldives, Chinese influence in Nepal, and China’s acquisition of crucial infrastructure in Sri Lanka have been eroding India’s once predominant position in the region. Across the subcontinent, China’s influence through the Belt and Road Initiative (BRI) has grown rapidly and that is pushing India to rethink ways to deliver more, faster, and better to its neighbour countries.

One of India’s responses has been through partnerships with extra-regional powers, including the United States, Japan, and Australia – which are all investing in energy, transportation, and other connectivity sectors to deliver joint alternatives to the BRI across South Asia. But India has also realised that its Quad partners are not always welcome by its smaller neighbours due to geopolitical sensitivities or Chinese pressure. For New Delhi, Russia thus comes in handy as an alternative partner which continues to garner much sympathy across the Global South. 

For Moscow, in turn, a growing profile in South Asia also aligns with its attempts to Look East and find diplomatic and economic opportunities beyond the West. This is largely welcome by India to craft a multipolar balance of power in Asia, suggesting that in New Delhi’s assessment Russia retains significant agency and should not (yet) be treated as China’s subordinate. Beckoning Moscow to explore congruences with Indian policies in Asia, India’s External Affairs Minister S. Jaishankar thus emphasised in 2019 that “Russia is a Pacific Power which has Indian Ocean interests” and that India therefore “hoped” for a “Russian version of the Indo-Pacific.”

One may have expected the Russia-Ukraine war to have tempered such Indian expectations, but the reality shows that India and Russia have since then been able to further align and convert congruences into co-operation in South Asia. Three areas stand out: politics, energy, and infrastructure.

Political co-operation between India and Russia is driven by their default preference for non-interference, especially in face of Western values-based interventionism, economic sanctions, and other forms of coercion. A notable instance of Indo-Russia diplomatic alignment on regional issues occurred during the 2014 Bangladesh elections. The US strongly criticised the results yet both India and Russia remained reserved and may even have aligned their positions. Most recently, this was again apparent in Indian and Russian responses to the 2024 re-election of Prime Minister Sheikh Hasina, in contrast to sanctions and political pressure from the United States and its European allies.

India and Russia have also frequently shared positions at multilateral institutions, including scepticism about initiatives such as the Responsibility to Protect (R2P). In India’s neighbourhood, this manifested most recently when both countries abstained from a UN General Assembly resolution condemning the 2021 Myanmar coup. New Delhi and Moscow have found ways to engage the military regime despite US imposed sanctions. And at the UN Human Rights Council, India and Russia’s votes on Myanmar have also aligned more often with each other than with the United States or European countries.

A second dimension of India-Russia convergence is focused on financial and technical assistance to facilitate South Asia’s energy transition. The most significant example is that of Bangladesh and joint support for the Rooppur Nuclear Power Plant (RNPP) — the country’s first. Led by Rosatom State Nuclear Energy Corporation, the project is anchored in a 2018 tripartite agreement between Russia, Bangladesh, and India.

The complexity of the project requires close coordination between New Delhi and Moscow. The involvement of India’s Department of Atomic Energy attests to the high levels of trust between their strategic and scientific establishments when it comes to working together in a third country, building on decades of bilateral nuclear co-operation. The RNPP has contracted Indian firms for civil construction, its transmission lines are financed by an Indian line of credit, and Indian experts are also working directly on site, as well as training their Bangladeshi counterparts.

A third dimension of India-Russia co-operation focuses on offering developmental solutions to South Asian countries seeking to reach middle-income status amidst global economic headwinds. Many of these countries are seeking alternative partners after BRI investments and Chinese imports slowed down, and there were bitter experiences with China-financed ‘white elephant’ infrastructure projects that aggravated their debt exposure, fiscal resilience or state capacity.

The Russian and Indian capital are exploring joint ventures with state support to cater to such investment and financing demands across the region, particularly in Sri Lanka.

There are indications that Russian and Indian capital are exploring joint ventures with state support to cater to such investment and financing demands across the region, particularly in Sri Lanka. One notable example is the Mattala Rajapaksa International Airport in Hambantota, built on a $190 million high interest loan from China’s Exim Bank. However, after opening in 2013 it was soon dubbed the ‘World’s Emptiest Airport,’ sustained heavy losses and shut down.

The Indian government had been eyeing Mattala airport for several years, to develop it as an Maintenance, Repair and Overhaul (MRO) hub for its growing aviation industry, but was wary of forcing one of its notoriously inefficient public sector companies to take on the burden alone. Russia then emerged as a useful partner for a private sector-led initiative: in July 2024, the Sri Lankan cabinet announced that it would transfer the airport’s management for 30 years to a joint venture between India’s Shaurya Aeronautics and Russia’s Airports of Regions Management Company. Given both companies’ profiles and the strategic importance of Mattala to Indian interests in Sri Lanka, it is very likely that this joint venture is being developed with sanction or support from both governments. 

Limits and Opportunities  

The India-Russia convergence in South Asia is still tentative; part of a broader attempt by both India and Russia to expand the scope of their relationship. Whether it succeeds or not remains to be seen, but for now more study is required on where, when, and how New Delhi and Moscow are translating areas of congruence into practical co-operation.

India is concerned about Beijing’s growing leverage over Moscow and will continue monitoring whether Russia’s South Asia policy will resist submitting to hostile Chinese interests.

There will be significant headwinds: India is concerned about Beijing’s growing leverage over Moscow and will continue monitoring whether Russia’s South Asia policy will resist submitting to hostile Chinese interests. India will also be worried about Russia possibly using South Asia as another staging ground to attack American interests or irritate the far more advanced level of US-India co-operation in the region. Finally, Western sanctions have complicated Russia’s ability to conduct international business, including in Rooppur, which will make it more difficult for the Indian government to nudge its companies into joint ventures with Russian capital in third countries.

Moscow has either been in alignment or chosen to defer to New Delhi on regional policies, paving the way for more co-operation.

Yet Russia and India still share a close bond and their overall high levels of political trust offer multiple opportunities in South Asia. With the occasional exception of Pakistan, Moscow has either been in alignment or chosen to defer to New Delhi on regional policies, paving the way for more co-operation. Both India and Russia have also independently explored Nepal’s hydropower potential, and future joint ventures could include the takeover of Chinese owned projects. Russia could also work with India to leverage the USSR’s significant footprint in the region during the Cold War, including the Panauti Hydropower Station in Nepal, Ghorashal and Siddhirganj power plants in Bangladesh, or the Ceylon Steel, Tyre and Sugar Corporations in Sri Lanka. Joint production of military hardware, as well as the softer dimensions of training and defence diplomacy offer two further areas that India and Russia are likely to explore to engage countries in the Indian Ocean region. 

Modi’s visit to Moscow may have resulted in a rather anodyne joint statement but there is far more than meets the eye: India and Russia have been silently exploring new areas of co-operation and, at least in South Asia, there is significant evidence of success.