India-Russia Bilateral Trade: An economic Analysis

Abstract

This paper studies the bilateral trade between India and Russia from two complementary analyses.  The descriptive analysis examines recent trade patterns, commodity composition and also addresses trade imbalance using data for 2020-2025, while the econometric analysis investigates the macroeconomic determinants of India-Russia bilateral trade using annual time-series data for 1991-2024. Despite geopolitical challenges and global economic fluctuations, trade between the two nations has grown significantly. This rise in trade is primarily driven by energy imports from Russia to India. However, India faces a persistent trade deficit with Russia. It also discusses the areas in which both countries can improve and strengthen their economic relations. Using annual data, we analyze the effects of India’s GDP, trade openness, Brent crude oil prices, and real effective exchange rates (REER) on trade flows. To address heteroskedasticity and autocorrelation, the Newey-West estimator was used. Results indicate that oil prices and India’s REER significantly influence trade, while other variables are not statistically significant. The findings underscore the importance of global oil prices and exchange rate movements in shaping the India-Russia trade relationship. This research provides insights for policymakers aiming to strengthen bilateral economic ties.