How India Profits From Its Neutrality in the Ukraine War

India’s purchases have put it strategically between Russia and the Western coalition backing Ukraine, as the world’s economic relationships continue to be rewired in the wake of the war.

The United States, Europe and other countries have imposed sweeping sanctions on Moscow. In an effort to hurt Russia but keep global supplies steady, the West also imposed a cap on the price Russia could charge for its oil.

This cheaper oil has found new markets — including India, which now purchases nearly two million barrels a day, roughly 45 percent of its imports, according to the International Energy Agency.

In addition to stoking India’s economy, cheap Russian oil has given India a lucrative business refining that crude and exporting the products to other regions that suddenly need fresh energy supplies. That includes the European Union, which has banned direct oil purchases from Russia.

India’s prime minister, Narendra Modi, has taken a neutral stance on the conflict in Ukraine. The country’s balancing act will be in focus this week, as Mr. Modi makes his first state visit to the United States.

The nations’ leaders will meet on Thursday to discuss new partnerships in defense, clean energy and space, in an effort to solidify what the Biden administration has called “one of our most consequential relations.” The conversations are likely to touch on reducing India’s ties to Russia, which include partnerships in defense and energy.

In a little over a year, India has gone from purchasing hardly any Russian oil to buying about half of what the country exports by sea.

Russia is the world’s third largest oil producer. Some of that oil is exported through pipelines, the destination of which cannot be changed without hefty investments. But the tankers that ferry oil across oceans can be more easily rerouted, often to China and India, which together purchased almost 80 percent of seaborne Russian crude oil exports in May.

China and India are buying so much Russian oil now that Moscow is selling more crude than it was before it invaded Ukraine. At the same time, lower prices have meant that the Russian government is earning less revenue on its oil trade.

The reasons for falling oil prices are complex, and experts debate how much they are because of the West’s price cap, or merely the result of a slowing global demand. Either way, India has found a way to take advantage of the situation.

The bulk of the crude that goes to India from Russia arrives at ports near Jamnagar in Gujarat State and is piped to nearby refineries.

The Jamnagar Refinery, which is owned by Reliance Industries, is the largest in the world, with the capacity to process more than 1.2 million barrels per day. Reliance is controlled by Mukesh Ambani,

India’s most powerful businessman and a strategic partner to Mr. Modi’s government.

India’s second-largest refinery is less than 10 miles away: the Vadinar complex owned by Nayara Energy. Nayara is half-owned by Rosneft, Russia’s state oil company; a Russian investment group has a stake in the other half.

So as the trade in this region grows, Russian companies — and, by extension, Moscow — are reaping some of the benefits.

Some of what’s processed at these sites is used domestically. But a growing amount is funneled to the global market, starting with Southeast Asia, Africa and — increasingly — Europe and the United States. India sells all of these products at market prices, earning revenue for its companies and bulking up the country’s reserves of foreign currency with dollars and euros.

The Center for Research on Energy and Clean Air, a research group based in Finland, published a report in April that highlighted the role of certain “laundromat” countries, which buy Russian oil, refine it into other products and sell it on to buyers in Europe, the United States and other jurisdictions that have halted direct purchases from Russia.

Chief among these countries named in the report was India, as well as China, Turkey, the United Arab Emirates and Singapore.

The port of Sikka, which serves the Jamnagar Refinery, was both the largest global import point for seaborne Russia crude oil and the single biggest point of oil exports to the countries that had imposed the cap, the report said. From December to February, the refinery exported almost $3 billion worth of refined products to countries observing the price cap.

India has rejected the notion that it is trying to profit from wartime sanctions.

In the lead up to India’s first time hosting the Group of 20 nations summit in September, the country’s diplomats have been working furiously to balance the concerns of the European Union, the United States, China, Russia and other members.

But the Modi government’s first priority appears to be making India, which recently surpassed China as the world’s most populous country, more self-reliant. In practice, that means pursuing its own interests without regard for its partners’ complaints.

In December, S. Jaishankar, India’s foreign minister, was asked in Parliament about India’s decision to buy Russian crude. “It is a sensible policy to go where we get the best deal in the interest of the Indian people,” he said. “If it is your contention that our position has been in putting the interests of the Indian public first, I plead guilty.”