India-Russia bilateral trade was USD 1.4 billion in 1995. By FY 2024-25 it had reached USD 68.7 billion. That is not organic market development. It is a structural realignment that accelerated after 2022 when Western sanctions closed Europe and North America to most Russian corporates, and India chose not to follow.
The official FDI data tells a misleading story. Russia ranks 31st in India’s FDI equity inflows with cumulative investment of USD 1.3 billion from April 2000 to September 2025. That figure is almost meaningless because it excludes energy sector investments structured through equity stakes. Rosneft’s stake in Nayara Energy alone represents approximately USD 20 billion. The formal FDI statistics do not capture it because it arrived through a different investment route.
The real question for Russian companies evaluating India is not whether the relationship is growing. It obviously is. The question is what specifically makes India the destination rather than alternatives. The answer runs across fifteen distinct factors that together make why Russian companies are investing in India less of a geopolitical story and more of a commercial one.
15 Reasons Why Russian Companies Are Investing in India
No single factor explains why Russian companies are investing in India. Some are drawn by the size of the market, others by policy support or shifting global trade routes. Add to that a long-standing relationship between the two countries, and the overall picture becomes much clearer.1. Market size
1.4 billion people with rising disposable incomes and infrastructure needs that will take decades to satisfy. Russian companies that lost European markets after 2022 needed alternatives of genuine scale. Very few economies outside China offer that scale. India does.2. Western sanctions created the pivot
After February 2022 and multiple rounds of Western sanctions, European and American markets became inaccessible for most Russian corporates. India’s strategic autonomy meant it neither joined the sanctions nor restricted Russian commercial activity. The door was open.3. Energy complementarity
India needs energy at scale. Russia supplies 30 to 35% of India’s crude oil requirements. That relationship did not exist before 2022 in any meaningful way. It is now the anchor of the entire bilateral relationship and the platform from which other sectors are being built.4. Rupee-ruble settlement
Central bank agreements between India and Russia enabled settlements through dedicated vostro accounts in Indian banks, removing the need for dollar intermediation. For Russian companies facing correspondent banking restrictions in Western currencies, this made India-facing transactions viable where other markets were not.5. The December 2025 Roadmap
The India-Russia Economic Cooperation Roadmap 2030 goes beyond political announcements. By setting out long-term cooperation across key industries, it gives businesses greater confidence that today’s investment decisions will continue to be supported in the years ahead.6. Nuclear energy partnership
Rosatom has been building India’s nuclear energy infrastructure for decades. Kudankulam Nuclear Power Plant is the largest nuclear station in India by installed capacity. Agreements for six additional reactors are already in place. The relationship is deep enough that it predates most of the current generation of corporate decision-makers on both sides.7. Defence and co-production
BrahMos Aerospace, the joint venture between India’s DRDO and Russia’s NPO Mashinostroyeniya, produces the BrahMos supersonic cruise missile, one of the fastest cruise missiles in operational use anywhere. Russia remains one of India’s largest defence suppliers. The technology transfer and co-production arrangements have made the defence sector a model for how Russian companies can work with Indian partners.8. Make in India incentives
India’s Make in India initiative has encouraged many Russian businesses to think beyond exports. With financial incentives available across several industries, setting up manufacturing operations in India has become a commercially attractive option for companies planning a long-term presence.9. Pharmaceutical capacity
India is the world’s largest generic pharmaceutical manufacturer. Russian companies looking to produce for Indian domestic consumption and for third-country markets in Central Asia and Africa, where Russian distribution networks already exist, find India’s pharmaceutical manufacturing base cheaper and more capable than building equivalent capacity elsewhere.10. IT and technology talent
India’s software engineering talent pool is among the largest in the world. Kaspersky, whose cybersecurity products are used by hundreds of millions of users globally, has built significant India operations to access this talent at cost structures that European or American operations cannot match. Other Russian technology companies are following the same logic.11. Demographic alignment with Russian export strengths
India’s growing middle class needs energy, fertilisers, steel, and defence equipment at scale. These are precisely Russia’s export strengths. The bilateral trade imbalance, India imports USD 63.8 billion and exports USD 4.9 billion, reflects genuine Indian demand rather than a relationship propped up by political preference alone.12. North-South Transport Corridor
The International North-South Transport Corridor connects Russia to India through Iran and Azerbaijan. It reduces freight time between Mumbai and Moscow from 30 to 40 days by sea to approximately 25 days by road and rail. Russian companies manufacturing in India or sourcing from India gain a logistics corridor that connects to both directions.13. Banking infrastructure
Sberbank and VTB expanded their India presence in 2025 specifically to facilitate bilateral transactions for businesses affected by Western sanctions. Without functional banking infrastructure between the two countries, the commercial relationship cannot scale. The banks followed the trade.14. India’s geopolitical neutrality
India has not joined Western sanctions. It has continued purchasing Russian energy. It has maintained defence procurement relationships. For Russian companies evaluating international investment, India’s political neutrality means the investment environment will not be disrupted by decisions made in Brussels or Washington.15. Soviet-era institutional trust
Many Russian businesses aren’t entering India as complete newcomers. The two countries have worked together for decades on major industrial and infrastructure projects, creating relationships that still matter today. That’s another reason why Russian companies are investing in India with greater confidence.What Is the Current State of India-Russia Trade?
The growth in bilateral trade has been remarkable, climbing from around USD 10 billion in 2019 to USD 68.7 billion in FY 2024-25. Rising imports of discounted Russian crude have been the biggest driver of that increase. The figures also highlight an important challenge. India imports significantly more from Russia than it exports. Recognising this imbalance, both governments are using the Economic Cooperation Roadmap 2030 to encourage stronger Indian exports across a wider range of industries. The payment mechanism problem is the most active challenge in the relationship right now. Dollar-denominated trade is complicated by sanctions and correspondent banking restrictions. The rupee-ruble vostro account arrangement works operationally but creates accumulated rupee balances in Indian banks that Russia cannot easily convert or deploy. Both governments are working on mechanisms to address this, including allowing the accumulated rupees to be invested in Indian assets, which would simultaneously solve the payment surplus problem and increase Russian investment in India.Which Are the Top Russian Companies in India?
Rosneft is the largest. Its acquisition of a controlling stake in Nayara Energy is the single largest Russian investment anywhere in India by value. Nayara operates the Vadinar refinery, India’s second-largest single-location refinery with a capacity of 20 million tonnes per year, and more than 6,600 retail fuel outlets across the country. This is not a financial investment. Rosneft is an operator. Rosatom is the most strategically embedded. The Kudankulam relationship means Rosatom is involved in India’s long-term energy infrastructure planning in a way that commercial companies rarely achieve in any country. Six additional reactor agreements ensure the relationship continues for decades. BrahMos Aerospace is the most visible joint venture. The cruise missile programme is cited by both governments as the model for deeper defence co-production and technology transfer. Kaspersky has built India into one of its largest markets globally. Its India operations serve both the domestic Indian market and act as a technology delivery hub. Sberbank and VTB entered India in 2025 to support bilateral business. Their presence makes banking infrastructure for Russian companies operating in India more accessible than it was before. Severstal has been involved in discussions around Indian steel infrastructure as India’s USD 1.4 trillion infrastructure pipeline creates demand for steel inputs that few countries can supply at the required scale.Is Russia Investing in the Indian Stock Market?
Direct Russian portfolio investment in Indian equities through the SEBI FPI route has been limited. SEBI’s FPI registration framework requires the applicant to be from a FATF-compliant jurisdiction. Russia’s current FATF status has created complications for formal FPI registration. Russian capital has reached Indian equity markets through Mauritius, Cyprus, and Singapore-based vehicles that hold Indian equities and are themselves funded by Russian capital. The transparency around this indirect exposure is limited by the multi-entity structures involved. The December 2025 Roadmap includes provisions for exploring mechanisms to facilitate smoother direct capital flows. That language suggests both governments recognise the gap between the economic relationship’s scale and the formal investment tracking that currently captures only a fraction of it. Whether a practical mechanism that satisfies SEBI’s FATF requirements emerges from those discussions remains to be seen.How Do Russian Companies Enter India Legally?
A Private Limited Company incorporated as a Wholly Owned Subsidiary under the Companies Act 2013 is the standard route. 100% FDI from Russia is permitted under the Automatic Route for most sectors. Russia does not share a land border with India, so Press Note 3 (2020), which requires Government Route approval for FDI from land-bordering countries, does not apply. The incorporation process, the FC-GPR filing within 30 days of share allotment, the GST registration, and the ongoing annual compliance obligations are the same for Russian companies as for any other foreign investor. The regulatory framework does not discriminate by origin. Payment for the initial share capital subscription is where the structural complexity sits. Dollar-denominated remittances from Russian entities may encounter correspondent banking restrictions at the AD bank level. Structuring the initial capital inflow through the rupee-ruble vostro account mechanism or through a third-country intermediary vehicle requires specific advice from an adviser familiar with both the FEMA requirements for inward FDI and the current correspondent banking environment for Russian entities. One advantage for Russian businesses investing in India is the India-Russia DTAA. It reduces withholding tax on several cross-border payments, helping lower the overall tax cost of doing business. That benefit doesn’t remove transfer pricing obligations, though. Intercompany transactions still need to be documented every year through Form 3CEB (Form 48 under new Income Tax Act).Conclusion
Why Russian companies are investing in India is not a story about one thing. The energy relationship is the foundation. The 2022 geopolitical shift was the accelerant. The December 2025 Roadmap is the framework. And India’s market size, political neutrality, pharmaceutical and technology capabilities, and sixty-year institutional relationship with Russia are the structural factors that make the investment thesis durable beyond the current geopolitical cycle. Indian FDI statistics capture only a fraction of the real Russian economic presence in India. Rosneft’s USD 20 billion in Nayara Energy alone exceeds the cumulative formal FDI figure by fifteen times. The relationship is significantly larger than the official numbers suggest and the USD 100 billion bilateral trade target for 2030 implies it will grow further. Corporate Legit Consulting LLP advises Russian companies on India entry, covering subsidiary company registration, FDI route analysis, Press Note 3 assessment, DTAA planning under the India-Russia treaty, transfer pricing documentation, FEMA compliance for initial capital inflow structuring, GST registration, and ongoing annual compliance. Reach out to us before the investment decision is made.Frequently Asked Questions
Fifteen reasons: market size, Western sanctions creating an eastward pivot, energy complementarity with India importing 30 to 35% of its crude from Russia, the rupee-ruble settlement mechanism removing dollar dependency, the December 2025 Economic Cooperation Roadmap 2030, nuclear energy partnership through Rosatom, defence co-production through BrahMos, Make in India manufacturing incentives, pharmaceutical production capacity, IT talent access, demographic alignment with Russian export strengths, the North-South Transport Corridor, banking infrastructure from Sberbank and VTB, India’s geopolitical neutrality on sanctions, and sixty years of Soviet-era institutional trust.
USD 68.7 billion in FY 2024-25, up from USD 10 billion in 2019. India imports USD 63.8 billion from Russia, dominated by crude oil, and exports USD 4.9 billion. The USD 100 billion target has been set for 2030 under the India-Russia Economic Cooperation Roadmap signed in December 2025. Closing the trade imbalance through expanded Indian exports is a stated objective of the Roadmap.
Rosneft is the largest investor through its USD 20 billion stake in Nayara Energy, which operates the Vadinar refinery and 6,600 fuel retail outlets. Rosatom is the most strategically embedded through the Kudankulam nuclear power plant and six additional reactor agreements. BrahMos Aerospace is the most prominent joint venture. Kaspersky is the largest Russian technology company in India by market presence. Sberbank and VTB established India banking operations in 2025.
Direct Russian FPI investment through SEBI’s formal registration route has been limited by FATF compliance requirements. Russian capital has accessed Indian equities indirectly through Mauritius, Cyprus, and Singapore-based intermediary vehicles. The December 2025 Roadmap includes provisions for exploring direct capital flow mechanisms between the two countries, though no formal SEBI-compatible route for Russian FPI investment has yet been established.
Yes. Russia does not share a land border with India so Press Note 3 (2020) does not apply. 100% FDI under the Automatic Route is available for most sectors. The structural challenge is payment: dollar-denominated capital remittances from Russian entities may face correspondent banking restrictions. The rupee-ruble vostro account mechanism or third-country intermediary vehicle structuring is typically used for the initial capital inflow. Specific advice from an India-Russia FDI specialist is required before the remittance is made.