Now that Russia is being heavily sanctioned, they may be forced to trade more in Indian Rupees, thereby pushing strongly in the direction of Soviet-era trade-relations.
The Rupee trade came to an end with the collapse of the USSR (see ‘Requiem for Rupee Trade’ by R. G. Gidadhubli, 1992), following which, both countries effectively subordinated their economies to the supremacy of the US dollar, even though the US had become a net-debtor money-printer since 1985. Rupee trade partially resumed in 2015, but now it will grow even more.
The following is from a fantastic book by Indian economist Santosh K. Mehrotra titled ‘India and the Soviet Union: Trade and Technology Transfer’ (1990):
“Servicing Soviet (and east European) project aid imposes quite a different form of burden on the Indian economy compared with Western loans. While payments of interest and repayment of principal on Western loans are in hard currency, Soviet loans are repaid in rupees; the rupees are utilised by the USSR for the purchase of goods and services in India, according to trade and payments agreements signed between the two countries.”
Ultimately, Soviet aid to India undermined their ability to appease eastern Europe, which naturally wanted to emulate the lifestyles they saw in western countries right next door.
“Soviet oil/oil product exports to India might be very much to the USSR’s economic and political disadvantage, in terms of its political relationship with east Europe. Given that oil is central to the USSR’s economic relationship with east Europe, Soviet oil exports to India may even have an opportunity cost in political terms, especially considering that the USSR intends to raise prices and cut quantities of oil exports to east Europe.”
On the one hand, the US pressured India to stop imports of Iranian oil in 2018, and they used an Indian-origin official, Nikki Haley, to deliver the threat – India capitulated, oil prices surged, and the Rupee devalued. That’s on top of all the US-Israeli wars against the Arab world that have also caused surging oil prices for India. On the other hand, Russia has literally never threatened India, and provides India its largest share of weapons.
Does India side with its trusted ally, or does it side with the Anglo-American empire that benefited from starving 40 million Indians to death under British rule, which then allowed Britain to export capital to its successor the US?
Such a tough decision.