Indo-Russian trade and economic relations seem to be the weakest link in the whole gamut of our growing and vibrant strategic partnership. Former Soviet Union was India’s largest trade partner, and India its largest trading partner in the developing world for years. However, market reforms and structural changes, coupled with the elimination of state monopoly in foreign trade following the break-up of the Soviet Union, dealt a heavy blow to Indo-Russian trade. Trade nosedived and then hovered around at $2-3 billion for more than a decade until 2006. However, the two-way trade volume started picking up fast, particularly since 2007 and crossed the $8-billion mark in 2008, generating the hope that the $10-billion bilateral trade target can be achieved by 2010.
While the Soviet share in Indian foreign trade was almost 9% and India’s share in Soviet foreign trade was close to 4%, the present situation is grim with India and Russia contributing less than 1%to each other’s trade volumes. This obviously does neither reflect each other’s economic potential nor is it commensurate with our thriving bilateral political cooperation.
Another issue of concern for both countries is the narrow base of the export baskets dominated by few traditional commodities. While India’s export basket to Russia is dominated by medicine, traditional agricultural goods like tea, coffee and spices, consumer goods like textiles, garments and leather, Russian exports to India are dominated by products like, metal, fertiliser, newsprint and machinery. Both countries need to diversify their export baskets.
The Soviet market was the largest export destination for our agricultural goods. Unfortunately, we are slowly losing it to others. Our tea exports to Russia have plummeted drastically. Brand promotion and quality control can retrieve the lost market.
India has lost a large segment of the huge Russian medicine market to western companies, with just over $400 million worth of Indian exports to a market worth $15 billion. The situation is not very different in the Russian consumer goods market in which India had a near-monopoly in the erstwhile Soviet Union.
Of course, infrastructural issues remain. Indian goods take 50 days to reach Russia, but the latter can get the same goods from Turkey, China or
Europe within a week. In this connection, the fast and effective operationalisation of the North-South transport corridor, which can cut the transit time and transport costs by half, is highly desirable. Problems in banking, finance and insurance also need to be addressed.
The content of our economic relationship should not be limited to bilateral trade. It should encompass investment, joint production, industrial cooperation, etc. Indian company Sun Group is a pioneer in this area, which had mobilised more than $200 million worth of investment in Russia’s beverage industry, controlling almost 40% of the beer production in that country. Russian telecommunication giant MTS is moving in a big way to have a strong presence in India’s telecom market.
Russia can play a significant role in ensuring India’s energy security. India has invested $2.7 billion in the Sakhalin-1 upstream project. We have purchased Imperial Energy Company operating in Russia for $2.58 billion and eyeing for participation in the Sakhalin-3 and other big-ticket energy projects in Russia. India needs to a more aggressive to have a strong footing in Russia’s huge energy sector.
Apart from our traditional cooperation in hydro and thermal power industry, Russia is helping us build the Kudankulam nuclear power plant in Tamil Nadu, which is likely to be expanded by another four reactors with Russian technical assistance. The NSG clearance has expanded possibilities for greater Indo-Russian cooperation in this vital sector, reflected in the framework agreement signed during the just-concluded bilateral summit in Moscow.
Defence cooperation constitutes a significant component of our strategic partnership. With defence cooperation expanding to joint research, joint development, joint production and joint marketing, this would provide a boost to our economic cooperation. India and Russia are cooperating in developing the fifth generation aircraft and multi-role transport aircraft. This shows Russia’s willingness to share its defence high-tech capabilities with India.
Asset swapping between the two countries can provide strong content to our economic cooperation. India should take note of the emerging customs union comprising Russia, Belarus and Kazakhstan and think of using Russia as a hub to expand its trade and economic relations with other CIS countries.
India and Russia had set up a joint study group during Prime Minister Manmohan Singh’s visit to Moscow in 2005 to suggest ways and means to strengthen trade and economic cooperation. The joint study group has submitted a comprehensive report. Steps should be taken to implement its recommendations.
Russia is resurging as a global power and has adopted a long-term development strategy that envisages an innovation-based economy. India should take note of this fact and try to strengthen the economic component of our strategic partnership accordingly.
Source : financialexpress.com