India is no one to take instructions from the West, nor is it going to harm its own interests just because the West wants it to take an anti-Russia line. First, India made this clear with its oil imports from Russia and now India is also looking for a historic barter agreement to bring in fertiliser from Russia for its farmers.
India looking for a historic barter agreement with Russia
As per a TOI report, India is looking for options to secure fertiliser supplies from Russia. It is looking at a mechanism to calculate the cost of fertiliser in Rupee. In return, Indian traders can export items of similar value to Russia.
Fertiliser is not on the list of banned Russian items and therefore India can import it without violating Western sanctions. Only this month, three ships carrying the crucial soil nutrients arrived in India from Russia. Russia, on the other hand, imports tea, medicines, basmati and non-basmati rice from India.
Bypassing Western restrictions
The main issue for both New Delhi and Moscow is that Russia is being cut off from the global financial payments settlement system. Even if India wants better trading ties with Russia, such Western restrictions make things somewhat uneasy. And that is exactly where barter comes in.
Now, India can purchase Russian fertiliser and Russia can purchase Indian goods without having to worry too much about Moscow’s exclusion from the global payment settlement mechanisms. A government official said, “We are confident of our traders getting more fertiliser from Russia under this arrangement to meet our requirement.”
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And this is working out well for India. This month, two Russian ships carried 1.16 lakh tonnes of NPK (nitrogen, phosphorus and potassium) to India, while a third ship brought in 66,000 tonnes of Di-ammonium Phosphate (DAP). Last month, the government had said that India had received fertiliser shipments of 3.6 lakh tonnes from Russia since the Ukraine war started on February 24.
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Securing sufficient supplies for farmers
India itself is a huge consumer of fertilisers. It is the second-largest importer of soil nutrients next only to China. India needs these fertilisers in order to support 60% of the country’s workforce that remains dependent on agriculture. Also, agriculture accounts for 15% of its $2.7 trillion economy. In any case, India needs to ensure a secure and steady supply of chemical fertilisers for its farm sector.
Moreover, the fertilisers market is presently in a stressed state. The prices were already running high and the Ukraine war has further affected the market. And this was only natural given that Russia is the largest exporter of fertilisers. It accounts for 23% of ammonia exports, 14% of urea exports, 10% of processed phosphate exports, and 21% of potash exports. Russian fertiliser is popular in major agricultural producers like the US, China and India.
For Indian farmers, the situation could have been particularly bleak given that the Kharif season requires extensive use of fertilisers for sowing paddy and other commercial crops. Any shortage of fertilisers in such circumstances would have therefore meant a failed crop for the farmers and could have created food security issues for the nation at large.
The Indian government had even assured farmers that there will be no shortage in supply of fertilisers despite the upsurge in global prices. It seems India to be ensuring this by securing supply of crucial soil nutrients from Russia under a barter agreement. India is aiming import of 1 million tonnes of di-ammonium phosphate (DAP) and potash; and about 800,000 tonnes of nitrogen, phosphorus, potassium (NPK) from Russia every year.
India is therefore handling the global fertilisers price rise crisis with a historic barter agreement. India is taking its own side amidst the Russia-Ukraine war instead of falling into the Western trap.