Undoubtedly, India’s strategic move to modernize its tank fleet is timely, especially given the current geopolitical tensions in Europe and the Middle East. This decision brings into question the future of nearly 2,500 Indian-made T-72 tanks. It’s clear now that India is on track to retire its thousandth T-72, which was initially manufactured under a Soviet license.

Plans to export the retired T-72s are in place. A senior official stated, “The tanks will undergo modernization before being exported, allowing countries in Africa, the Middle East, and Southeast Asia to benefit from these combat vehicles.” The overhaul of these tanks will be carried out at the Heavy Vehicles Factory in Avadi, the same facility that produced them under license before shifting to the T-90s in the 2000s.

Despite fierce competition, India might find several opportunities to sell its tanks. A major selling point for the T-72 is its widespread use, which means there’s a broad market—from South Sudan to Venezuela—interested in augmenting their fleets with these well-supported vehicles.

The country with arguably the largest capacity to accommodate these vehicles is Russia itself. Over the years, Russia has reactivated hundreds, if not thousands, of vehicles from storage that were side-lined post-Soviet era. While Russian reports boast of ramping up production of the T-90M tanks to over 100 units per month, conservative estimates suggest that Russia might continue showing strong interest in further T-72 acquisitions.

The uncertainty lingers on whether India will succumb to Western pressure to avoid direct arms transfers to Russia, opening doors for potential rerouting through third countries. This situation echoes the economic sanctions imposed on Russia by Western nations, particularly concerning Russian oil and gas trades.

Following these sanctions, India has emerged as a pivotal intermediary in the export of Russian oil and gas. A prominent example is the large-scale import of Russian oil by India at discounted rates. Remarkably, in 2023, India positioned itself as the primary customer for Russian offshore crude oil, with imports skyrocketing to over half a billion barrels in the first half of the year alone.

Data from the Kpler analysis company shows a staggering increase in Russian supplies to India, soaring more than tenfold compared to pre-war levels. This surge has enabled India to resell processed products, such as diesel, to Europe, sidestepping direct sanctions against Russia.

Even with international sanctions, India manages to buy Russian oil at significant discounts—ranging from $20 to $35 per barrel below market prices. In 2023 alone, this strategy helped India save approximately $3.6 billion. Indian refineries leverage this discounted Russian oil to produce and export petroleum products, like diesel, primarily to the European market. This has sparked criticism from the EU, which calls for stricter measures to counter practices that undermine efforts to diminish Russian energy revenues.

Key Indian refineries, such as the one in Jamnagar, receive substantial quantities of Russian crude oil and transform it into a variety of products, including diesel, gasoline, and jet fuel. In 2023, Europe hit a record by purchasing refined products from India, with volumes reaching 231,800 barrels per day—a remarkable 115% increase from the previous year.

European nations, particularly the Netherlands and France, are key purchasers of Indian fuels made from Russian raw materials. In 2023, the Netherlands acquired 24% of India’s total refined products, closely followed by France with 23%. Romania, Italy, and Spain are also significant importers of Indian-produced fuels.

Despite European Union sanctions banning direct imports of Russian crude oil and products, the sale of these refined fuels via countries like India highlights regulatory gaps. Russia manages to sustain its revenue by exporting to India, which then caters to the European market’s demand for fuels, especially diesel.

One of the tactics employed to dodge sanctions includes using the so-called “dark fleet” – vessels that deactivate their transmitters and conceal their routes to transport Russian oil to clients like India and China. Consequently, Russian supplies persist despite international sanctions, circumventing G7 oil price limits. Notably, around 36% of India’s oil imports in March 2023 originated directly from Russia.

In recent developments, Russia has grappled with currency restrictions. While India purchases Russian oil using rupees, these funds are challenging to convert on a broader scale, limiting Russia’s ability to utilize these capitals effectively. During a statement in September 2023, Russian Foreign Minister Sergey Lavrov admitted that Moscow was exploring options to invest the accumulated rupees in the Indian economy instead of using them for immediate military and budgetary needs.

At present, Russia holds Indian rupees that are of little use outside India. Meanwhile, India possesses thousands of tanks that it can export worldwide, including to Russia. Historical context shows that India, with its burgeoning market, remains largely undeterred by potential sanctions[Russian gas and oil; S-400 deal; Su-30SM production; AK assault rifles; Aircraft engines etc]. The New Delhi government is prepared to invest hundreds of billions of USD over the next decade in Western-manufactured weapons and defence systems.

Ultimately, securing contracts with Washington or Paris for advanced weapons and local production to serve the Asian market is more advantageous than dealing with 2,000 outdated tanks that the US is likely to help Ukraine dismantle.