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India gains Rs 350 billion by importing discounted Russian crude following Ukraine conflict
The import of Russian crude at discounted rates has benefitted India hugely. Crude import at discounts coupled with levying windfall tax on domestic crude helped India gain Rs 350 billion. The Centre introduced the windfall tax in view of a surge in prices following the Russia-Ukraine conflict which began in February.
The crude import from Russia made it India’s second-largest oil supplier, sending Saudi Arabia to the third spot in July. However, the latter secured its earlier position in just a month and now Russia is our third-largest oil supplier, Reuters reported citing trade data.
India went on bargain hunting for Russian crude as the Ukraine conflict prompted Moscow’s traditional buyers to shun those barrels, and traders started offering big discounts. Despite immense pressure from developed nations to not buy from Russia, India chose to import crude.
The move was even defended by foreign minister S Jaishankar who called it the “best deal” for the country. Earlier, he said India and others, like Europe, should be free to ensure the impact on their economies is not traumatic. India has emerged the second-largest buyer of Russian crude after China.
India’s import from Russia
India imported $11. 2 billion mineral oil from Russia during April-July. There is a significant eight-fold jump in the number as it was $1. 3 billion in the corresponding period last year, according to the data from the commerce department. Since March, when India stepped up imports from Russia, imports have topped $12 billion, against just a shade over $1. 5 billion last year.
To be clear, oil is purchased by refiners and not the government, however, cheaper oil has a positive impact on macroeconomic parameters of the economy. Oil bought at a lower cost helps in keeping the costs down, the current account deficit in check as it lowers the import bill and reduces dollar demand, reported ToI.
It is worth mentioning here that after this is the second time that looking for discounted rates in the global oil market has saved India money. Earlier, we managed to Rs 250 billion in 2020 when oil prices crashed as the pandemic shut down the world. The Indian government had than filled up strategic reserves and refiners stored oil in ships.
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