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India's steadfast strategy of continuing to purchase affordable oil from Russia despite Western pressures has resulted in substantial savings of around $7.9 billion in the country's oil import bill during the first 11 months of the fiscal year 2022-23, significantly aiding in lowering its current account deficit.

Under the leadership of Prime Minister Narendra Modi, the Indian government has maintained its ties with Russia despite sanctions imposed by the West on Moscow.

Recent data compiled by trade tracking agencies Kpler and LSEG revealed that in April of this year, India increased its imports of Russian oil while reducing imports from Iraq and Saudi Arabia compared to the previous month. The imports during April witnessed a notable increase of 13-17 percent.

Russia retained its position as India's top oil supplier in April, followed by Iraq and Saudi Arabia, according to the data.

The volume of crude petroleum imported from Russia surged to 36 percent in the first 11 months of FY 2024, a significant rise from 2 percent in FY 2022, while imports from West Asian countries such as Saudi Arabia, the UAE, and Kuwait decreased to 23 percent from 34 percent, as per data from the Ministry of Commerce and Industry.

The substantial discounts on Russian oil have led to substantial savings in the oil import bill. According to an ICRA report, the unit value of imports from Russia was notably lower than that from West Asia, resulting in savings of $5.1 billion in FY 2023 and $7.9 billion in the first 11 months of FY 2024. This has contributed to a reduction in India’s current account deficit (CAD)/GDP ratio by 15-22 bps in FY 2023-24.

ICRA's calculations suggest that a $10 per barrel increase in the average crude oil price during the fiscal year would lead to a significant rise in net oil imports, potentially widening the CAD by 0.3 percent of GDP. Therefore, if the average crude oil price reaches $95 a barrel in FY2025, the CAD is expected to increase to 1.5 percent of GDP from the current estimate of 1.2 percent for FY 2023-24.