Russia created a covert trade channel with India to secure critical electronics important for its war efforts in Ukraine, according to a report published in the Financial Times on Wednesday, a development that comes at a time when India’s ties with Moscow have already been a growing source of friction between New Delhi and Washington.

The trade route, used for acquiring sensitive goods, has also remained hidden from western governments, as per the Russian state correspondence FT stated it had seen.

The report added that Russia’s industry and trade ministry drew up confidential plans in October 2022 to spend around 82 billion Indian rupees ($1bn at the time) to get critical electronics through the secret channel.

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It may be noted that the ministry oversees defence production to support Moscow’s full-scale invasion of Ukraine.

The report further said the plan aimed to use the reserves of rupees amassed by Russain banks from its oil sales to India, and Moscow saw New Dehli as an alternative market to secure crucial goods, which were “previously supplied from unfriendly countries”.

The two sides targeted dual-use technologies, which could be used for both civilian and military purposes but are subject to western export controls.

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The reports mentioned a leaked correspondence of Alexander Gaponov, deputy head of the ministry’s “radio-electronics” division, who asked an opaque Moscow-based organisation (the Consortium for Foreign Economic Activity and International Interstate Cooperation in Industry) with ties to Russian security services to present plans to get critical components from India.

The consortium president Vadim Poida reportedly replied that the organisation had developed some specific plans with the Russian electronics industry and representatives of relevant Indian state and private businesses to make use of the Kremlin’s rupees.

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As per the report, Poida came up with a five-stage plan to help Russia establish a supply of dual-use components by using its rupees through a closed payment system between Russian and Indian companies, which would remain beyond the oversight of western countries.

Russia could purchase up to Rbs100 billion of components including parts for server, telecommunication, and other critical electric equipment, as per the consortium estimates mentioned in the report that highlighted that the consortium’s legal entity had set up in 2013 and Poida took it over and renamed it in March of 2022, just a month after Russia invaded Ukraine.

The report also mentioned some Customs filings such as an Indian company Innovio Ventures was listed in trade declarations as the supplier of at least $4.9 million of electronic equipment, including drones, to Russia as well as $600,000 of goods shipped to Kyrgyzstan.

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The transactions were listed in Russian filings as settled in Indian rupees, according to the report.

The shipments to Russia included $568,000 of electronic equipment for use in radio-electronic systems to Testkomplekt, a Russian company that has been hit by US and EU sanctions.

In the report, FT also cited Wally Adeyemo, the US deputy treasury secretary, who wrote in July to three of India’s top business organisations warning them that “any foreign financial institution that does business with Russia’s military industrial base risks being sanctioned itself”.

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However, Anatoly Popov, deputy CEO of Russia’s largest lender, Sberbank, told Reuters this week that Russia’s trade with India is booming and bilateral payments are proceeding smoothly without the glitches that have been hampering trade with other countries.

Sberbank handles payments for up to 70% of all Russian exports to India. Russia’s trade with India nearly doubled to $65 billion in 2023, with the south Asian country becoming a major importer of Russian oil after the imposition of Western sanctions on Moscow in 2022 over the conflict in Ukraine.