India has benefited greatly from Western sanctions against Russia. Since Russian oil cannot be imported directly to Europe, India has stepped in as a buyer. There, crude oil is processed and imported back into the EU as refined fuel.

Therefore, the European Union’s foreign policy chief Josep Borrell was furious. Indo-Russian cooperation will undermine the effectiveness of punitive measures imposed by the EU, Borrell wrote on the official EU blog-Commission.

India has increased its oil imports from Russia from 1.7 million barrels (one barrel equals 159 litres) per month in early 2022 to more than 63 million bpd now. Exports of products such as jet fuel or diesel from India to the EU increased from 1.1 million barrels in January 2022 to 7.4 million barrels in April 2023.

Dilemma for EU: India did not violate Russian sanctions

However, stopping the hustle and bustle doesn’t seem easy. Borrell acknowledges that Indian companies are not subject to European law. So far, EU sanctions have not taken effect. But that’s not sustainable for the EU in the long term: “If diesel or gasoline comes to Europe from India and is produced with Russian oil, that is of course an evasion of sanctions and member states should take action,” Borrell told the Financial Times.

India reacted immediately: External Affairs Minister Subrahmanyam Jaishankar advised EU policy makers to review their own laws. He was referring to EU Council Regulation 833/2014, which states that “Russian crude will be significantly converted in third countries and will no longer be treated as Russian”.

Borrell said any mechanism to curb the flow of Russian oil should be implemented “by national authorities” and suggested the EU could target buyers of Indian refined fuel, believed to be derived from Russian crude. “If they sell, it’s because someone is buying. And we have to be careful who buys it,” he said.

Expert: EU plan is an insult to India

For India expert Christian Wagner of the Stiftung Wissenschaft und Politik (SWP), Borrell’s move was “an affront to India”. Borrell clarified his position by making it immediately before a meeting of the EU-India Trade and Technology Council – the Euro-India business council that EU Commission President Ursula von der Leyen offered India in 2022 shortly after the start of the Ukraine war to intensify cooperation.

Formally, the EU has nothing to do with the Indian government, which follows the EU sanctions regime, Wagner explained in an interview with the Berliner Zeitung. The oil trade is only handled by private companies and not by state structures. However, Wagner made it clear that these companies, and especially the Ambani family’s Reliance Group, are very close to Indian politics. Reliance Group is the biggest beneficiary of India’s rapidly increasing oil trade, according to a report by British business magazine The Economist. According to this, Reliance earns a gross profit margin of five US dollars for every barrel of refined oil from Russia. The owner of the corporate network, Mukesh Ambani, is the richest man in Asia.

Wagner explained that the only step left for the EU was to concentrate on oil buyers in Europe. If European companies are prevented from importing oil products from India, India will be forced to look for new customers, explained Wagner. However, India must quickly find a new business partner in the Global South. The new sanctions are therefore unlikely to cause economic damage to India.

Wagner suspects another objective: “This is a warning shot by the EU to signal to India that the foreign policy position on the Ukraine war is critical.” Indian Prime Minister Narendra Modi did not condemn Russia’s war of aggression in Ukraine. India is not interested in weakening Russia, Wagner explained. Otherwise, Russia will orient itself closer to China – perhaps India’s biggest rival on the Asian continent.