Power Abroad, Pain at Home: The Dual Face of India’s Russian Oil Strategy

Hindu College Gazette Web Team
6 days ago
7 min read

Introduction

Amidst the shifting landscape of global energy geopolitics, India has emerged as a significant power, asserting strategic sovereignty to safeguard its national interests. Its expanding economy and vast population have driven a steadily rising demand for petroleum products. However, due to limited domestic production, the country relies on imports for nearly 85% of its needs making it the third-largest importer of crude oil in the world. Traditionally, India has depended on the Middle Eastern countries, particularly Saudi Arabia, Iraq and United Arab Emirates (UAE) to meet this demand. But since the onset of the Russia–Ukraine war, this dependence has shifted decisively toward Russia. Western sanctions on Moscow have compelled Russia to sell its oil at discounted rates, creating an opportunity for Indian refiners to secure cheaper imports and diversify their energy sources.

While this shift toward Russia has strengthened India’s geopolitical position and demonstrated strategic autonomy in global affairs, its economic benefits for Indian citizens remain uncertain. Despite the availability of discounted Russian Urals, retail fuel prices in India have stayed near record highs. This raises a crucial question about who truly benefits from this energy realignment.

This essay argues that India’s Russian oil strategy embodies a paradox by showcasing the dual face of India’s Russian oil imports as a geopolitical success that enhances national sovereignty while producing economic inequality where private refiners benefit and citizens continue to bear the cost.

The Geopolitical Shift: India’s Russian Oil Strategy

Since the onset of the Russia–Ukraine war in February 2022, India’s oil trade with Russia has witnessed a staggering rise. Russian petroleum supplies were less than 1% of India’s total oil imports before 2022, but rose to nearly 40% in 2025. The strategic shift toward Russian Urals crude is driven by its lower price, a consequence of western sanctions on Moscow. Beyond cost, Urals medium-sour and heavier quality suits India’s complex refineries, yielding more diesel and jet fuel. According to Kpler, this has allowed both state-owned and private refiners to operate above capacity while maintaining strong margins. In contrast, Middle Eastern oil is costlier, lighter, less sulfurous and requires different refining setups.

However, this geopolitical maneuvering should not be viewed solely through an economic lens. The trade with Russia forms part of India’s broader strategy to transform its historically significant relationship with Moscow in the backdrop of a growing Russia–China partnership, which has gained added salience amid the Western isolation of Moscow following the Ukraine war. Recent tensions in the Middle East, including the Israel–Hamas conflict, U.S.–Iran confrontations and countless proxy wars have disrupted supply chains, further compelling India to diversify its energy basket and reduce dependence on a single region.

Over the past few decades, India’s increasing tilt towards the U.S. has sometimes been perceived as sidelining its traditional partner, Russia. By opening new avenues of trade with Moscow, India aims to maintain a historic balance while asserting its strategic autonomy. This shift also aligns with India’s vision of promoting a multipolar global order, offering a counter to the Western-dominated liberal frameworks. Despite criticism from Western nations, India’s firm and unyielding stance has been widely appreciated by political commentators, underscoring a geopolitical success and demonstrating India’s growing influence abroad. India’s External Affairs Minister S. Jaishankar, too, has repeatedly emphasised that such decisions are guided by national interest and the need to ensure energy affordability for Indian consumers.

However, Jaishankar’s claim of ensuring energy affordability appears to have fallen flat in the face of economic realities as this geopolitical success has not translated into economic gains for the average Indian consumer. While private refiners have profited immensely, ordinary citizens continue to face record-high fuel prices, a paradox that is explored in the subsequent section.

Winners and Losers of Cheap Crude: Inside India’s Domestic Oil Paradox

Historically, India’s fuel pricing system has evolved from state-controlled rates to market-linked pricing. Petrol was deregulated in 2010 and diesel in 2014, enabling oil marketing companies to revise prices daily since 2017. However, despite this mechanism, taxation remains the decisive factor in retail fuel costs where central and state taxes together account for nearly half the price of petrol and over 40% of the price of diesel. Fuel taxes have become a major fiscal pillar for both Central and State governments, generating around ₹4.7 lakh crore annually, with excise duties and Value-Added Tax (VAT) providing a steady and reliable income for both tiers of government. Thus, while the state secures stable revenue irrespective of global oil trends, consumers continue to face persistently high fuel prices. Yet, the story of unequal gains extends beyond taxation towards those who have benefited the most from cheap Russian crude: India’s private refiners.

The biggest beneficiaries of India’s pricing mechanism and Russian oil strategy have undoubtedly been the country's private refiners. Reliable industry estimates, cited in renowned newspapers like Business World and The New Indian Express, suggest that Reliance Industries and Nayara Energy (backed by Rosneft) together earned $16 billion in profits, with Reliance alone accounting for $10 billion. Per-barrel profits were equally striking, reaching $12.5 for Reliance and $15 for Nayara Energy. These gains were primarily realized through exports to foreign markets such as the European Union (EU), Singapore, the US, and the UAE. Ironically, the very Western nations opposing Russia’s oil exports indirectly became the biggest buyers. Bloomberg and Kpler reported that Reliance also signed an agreement with Russia to import 500,000 barrels per day, with its Urals crude imports rising from 10% of the total share in 2022 to 36% in 2025. Nayara Energy’s Urals imports surged even more sharply, from 27% in 2022 to 72% in 2025. While private refiners capitalised on discounted Russian crude for exports, state-owned refiners such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and HPCL (Hindustan Petroleum Corporation Limited) primarily focused on domestic supply, also earning significant profits. This data highlights the real dynamic behind India’s geopolitical move which, while being portrayed as beneficial to domestic consumers, has largely served as a vehicle for private windfalls.

Thus, while private refiners have gained immensely, the average Indian consumer has emerged as a loser who continues to suffer from high fuel prices. One of the main objectives behind deregulation was that consumers would pay fair market prices, but this has not materialised in India. Fuel prices continue to hover around ₹88 for diesel and ₹95 for petrol, placing a heavy burden on citizens. Meanwhile, Indian refiners continue to import crude at below $30 per barrel, nearly 50% lower than the $60 price cap set by Western nations on the import of Russian crude. This situation reflects not just persistently high fuel prices, but also a breach of public trust. While revenue and profit are significant, the system currently seems to favor private gains and fiscal stability over public welfare.

These dynamics reflect the dual face of India’s Russian oil strategy, which has strengthened the country’s geopolitical leverage while simultaneously producing domestic inequality by concentrating gains in private hands. This paradox sets the stage for a closer examination of the duality between power abroad and pain at home.

The trade-off: Geopolitical Success vs Domestic Inequality

India’s strategy of importing discounted Russian crude oil has undoubtedly been a geopolitical success. By preserving its strategic autonomy and acting independently, India has not only secured its long-term energy interests but also asserted itself as a major power in a multipolar world, capable of navigating global crises without succumbing to external pressures. Concomitantly, this approach has eased New Delhi’s anxiety over the growing Russia–China alignment, which it perceives as a potential geopolitical threat. Moreover, it has strengthened the India–Russia partnership beyond the traditional domains of defence and security, expanding it into the economic and energy spheres and allowing India to maintain a delicate balance between the West and Moscow.

However, the domestic picture tells a different story. While private refiners like the Mukesh Ambani–owned Reliance Industries and Nayara Energy have profited immensely through exports and the government has benefited through increased revenue the Indian consumer has suffered under the weight of high fuel prices. In essence, thus, every arm of the state except its people has gained from India’s Russian oil trade.

This paradox underscores a deeper policy dilemma: a trade-off between geopolitical success and domestic economic inequality. Addressing this imbalance requires deliberate and systematic policy mechanisms including more consumer-friendly fiscal measures, rationalisation of fuel taxation and regulatory oversight of refiner profits. Such distributive steps could help align India’s geopolitical gains with tangible domestic benefits, ensuring that strategic victories abroad translate into shared prosperity at home.

Conclusion

India’s Russian oil strategy captures the essence of its evolving foreign and economic policy. Its foreign policy is guided by pragmatism and strategic autonomy, which under Prime Minister Narendra Modi, has translated into strategic engagement with multiple global actors. In contrast, its economic approach reflects an increasingly capitalist orientation, where private enterprise plays a growing role, with the line between free markets and cronyism fast blurring. This duality encapsulates the paradox discussed above: India’s strategic engagement and pragmatic diplomacy have produced a geopolitical success, yet the benefits have not fully translated into public welfare, as the gains remain concentrated among private refiners and, to some extent, the state. The unequal distribution of these benefits has thus undermined the broader socio-economic significance of this geopolitical leverage.

The dualism of power abroad and pain at home compels a deeper reflection on why India’s successes in the international arena have not yielded proportional domestic dividends. Bridging this gap requires innovative policy solutions, increased transparency, and more equitable profit distribution. Ultimately, the future of India’s energy strategy will be defined by whether it becomes a triumph for its citizens or remains a privilege for a selected few.

By Rudraksh Bansal

Rudraksh Bansal is a 4th-year undergraduate student of Political Science (Hons.) at Satyawati College, University of Delhi. He brings an unusual blend of interest to his work, combining geopolitics and foreign policy with a deep passion for poetry.

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