When Prime Minister Narendra Modi met President Vladimir Putin in Brazil during the Brics summit in July he told him: “Even a child in India if asked to say who is India's best friend will reply it is Russia because Russia has been with India in times of crisis”.Last month, Modi conveyed to Deputy Prime Minister Dmitry Rogozin that India gives great importance to the special strategic partnership with Russia.
Rogozin was in New Delhi for preparatory talks for the annual Indo-Russian summit to be held on December 11. He also spoke at the eighth Indo-Russian Forum on Trade and Investments, the most important bilateral business engagement for the two governments.
Russian technology combined with Indian entrepreneurship and the new government’s business-friendly policies can give a big boost to our commercial relations. Economic and commercial relations have been the weakest link in our otherwise robust bilateral ties.
Though the two governments had set a trade target of $20 billion by 2015, our current level of trade is just about $6 billion, according to data from the Indian side. At the end of 2013, India’s direct investment in Russia was about $3.4 billion, a large part of which in oil and gas blocks acquired by OVL. Russian investments in India amounted to a little more than $0.8 billion, mainly in telecom.
Somehow, there has been limited interest from the private sector on both sides. The main reason could be that we have only highlighted the risks associated with doing business.
Where do we go from here?
Both governments are paying attention to strengthening economic cooperation. Talks are on for greater engagement between India and the Customs Union of Russia, Belarus and Kazakhstan which will soon become the Eurasian Economic Union.
The upcoming North-South Corridor which envisages a ship, rail and road route from India’s west coast to Russia via Iran and Central Asia is expected to significantly reduce both shipping costs and transit time. Our businessmen should be encouraged to look beyond Moscow and St Petersburg and explore Russian regions rich in natural resources, have a well-developed infrastructure and are keen to establish business relations with India.
The Russian government’s decision to ban fruit, vegetables, meat, fish, milk and dairy imports from the US, EU, Australia and Canada is an opportunity for Indian companies. Russia has just allowed import of buffalo meat from India.
Alrosa, the only company authorised to export diamonds from Russia, is expected to enter into long-term supply contracts with Indian importers of rough diamonds. A Russian-Indian working group for high priority investment projects has been set up. The Russian side should consider participating in specific manufacturing projects in India.
On the infrastructure front
Russian companies also have considerable experience in developing infrastructure projects. India has invited Russian participation in the Delhi-Mumbai Industrial Corridor and the Dedicated Freight Corridor — among the largest infrastructure projects in the world — along with the Bangalore-Mumbai Economic Corridor and the Chennai-Bangalore Industrial Corridor.
The Russian company Sistema has shown interest in building a ‘smart city’ in India. A formal agreement is likely to be signed during the upcoming summit. India and Russia are also expected to sign a number of agreements for close cooperation in defence, nuclear energy, oil and gas exploration, space, science and technology and aviation, among others.
However, certain challenges need to be overcome. Foremost is the visa regime, particularly for business visitors. A visa facilitation agreement between leading business associations of the two countries can address this issue.
The fall in global oil prices and the sanctions imposed by the West have started impacting the Russian economy. The rapid depreciation of the rouble has further aggravated the situation. It is in this context that Russia regards old friend India with a lot of expectations.
The summit meeting should see a redefined strategic vision.
The writer is the president of FICCI