India-Russia co-operation can generate additional revenue of about $200 billion by 2030, with about half generated through growing trade volumes in petroleum and coal. Still, there needs to be a focus on making trade more mutual, according to a report by a Russia-based strategy consultancy.
Mutual benefits could be achieved by focussing on joint projects in third countries, increased Indian exports in items like pharmaceuticals and joint ventures in manufacturing, which could contribute another $100 billion in increased revenue by 2030, per an analysis by Moscow-based consultants Yakov & Partners .
As Russia redirects trade flows from its traditional markets, the dramatic growth in India-Russia bilateral trade (in 2022) presents both an opportunity and a challenge, it said. “Given the current trade deficit, there is no doubt that India-Russia co-operation should be taken to the next level and trade should be harmonised. Hundreds of billions of Indian rupees earned by Russian exporters and held in Indian banks could be deployed for both investments in India and exports of Indian goods to Russia,” the report said.
With the Western economies imposing economic sanctions against Russia following its attack on Ukraine in January 2022, Russia increased its exports to India (dominated by crude) to $36 billion last year from $9 billion in 2021, while India’s exports decreased despite multiple opportunities, the report emphasised.
Of the $200 billion potential additional revenue generation by 2030 envisaged in the report, increased trade volumes, driven by Russian oil and coal, are expected to generate $90 billion. “Oil and petroleum products should be the main drivers of Russian exports as India’s oil demand is expected to grow by 40 per cent to 7 mb/d (million barrels per day) by 2030 (vs. 2020). …India’s total imports of coking coal are expected to grow by 12 per cent over the same period, while Russian low-cost coal can gain market share,” it noted.
For more balanced gains, the report highlighted several avenues. One such area is getting into joint projects to upgrade infrastructure in the Middle East, Asia and Africa. “India and Russia could potentially capture a significant share of that market in countries with which they have strong ties ( the UAE, South Africa, Bangladesh,Indonesia, Vietnam and others)...a 20 per cent market share could lead to around $ 60 billion of additional annual revenue by 2030,” the analysis stated.
Transfer of Russian manufacturing capacity and technology to India can be another area of pushing mutual trade. According to the report, Shipbuilding, power generation, railway machinery, chemicals and fertilizers and steel could be combined into one special economic zone, generating sales of about $8 bn per annum.
Further, replacing Western suppliers in the Russian pharmaceutical sector, which is likely to grow to $60 billion by 2030 from $42 billion in 2022, could generate around $ 15 billion of revenue for Indian companies, especially generic producers, by 2030, it said.
The report also proposed the creation of a new Indian-Russian player in the ocean freight market could facilitate the growing trade volumes between the two countries and ease the redirection of Russian trade flows to India. “Assuming that such a joint venture captures a 25 per cent share of shipments between India and Russia, it could generate around $ 22 billion of revenue by 2030,” the report said.