Indo Russian bilateral trade

When Indian Prime Minister Narendra Modi met Russian President Vladimir Putin at the recently held BRICS summit in Fortaleza, Brazil, the former said, “Ask any child who is India’s friend. He will reply it is Russia.”This is an indicator of the strong relation that Russia and India share. But how strong is strong? Analysts believe that the relationship is strong but the bilateral trade between both the countries can get much stronger.

Bilateral trade – A glance

The 70s and the 80s were considered to be the peak of bilateral relations between both the countries. The relationship has grown ever since. In 2012, the bilateral trade grew by 24.5 percent to touch USD 11 billion. In 2013, it decreased a bit but in 2015, both the countries are aiming to register a trade volume of USD 20 billion. It, however, pales in comparison to the trade between India and China which is at about USD 66 billion or to the trade between India and the US which is at USD 96 billion. But with the past that both the nations have shared, the growth can be considered to be steady and progressive.

Indo-Soviet relations – The golden era

The relationship between India and Russia began in 1955 when the then Prime Minister of India Jawaharlal Nehru visited the Soviet Union and later in December 1955, Khurshchev returned the trip by making a visit to India. Over the years, the Indo-Soviet relationship grew in the areas of trade, energy, defence and metallurgy. Russia supported India on the contentious issue of Kashmir and stood a strong supporter when India and Pakistan went to a brief war in 1965. It even acted as a mediator between India and Pakistan after the war. In 1971, India and Russia signed the Indo-Soviet Treaty of Friendship and Cooperation. In 1980, both the countries vouched for a world that is free of nuclear weapons.

After the break-up of the Soviet Union in 1991, the bilateral relations went through a period of uncertainty. India had to face a new Russia, which was managing its political, domestic and economic issues and was heavily dependent on the West for its economic revival. In 1993, Russian President Boris Yeltsin paid a visit to India with a friendship treaty in order to revive the old ties.

However, the treaty treated India as a normal partner instead of a special partner and instead of pledging strong support in case of peace threats, it offered regular consultations and coordination. Though the relations between both the countries continued in a respectable manner, the story was never the same.

Then by 1998 Russia started shifting away from Western countries and began reaching out to its old allies. The then Russian Prime Minister Yevgeny Primakov visited India and proposed a strategic tie between India, Russia and China. The mutual suspicion that existed between India and China posed impediment to this tie. Then in 2000, Russian President Vladimir Putin gave a breath of fresh air to the relationship between India and Russia and signed the Declaration of Strategic Partnership with India in 2000. In 2004, Putin reaffirmed the relationship saying that India is Russia’s strategic privileged partner.

Current bilateral trade imbalances between India and Russia

While the bilateral trade between India and Russia have increased over the past years, there is much more that can be done. Currently, India and Russia share a strong relationship in the areas of defence, hydrocarbons and nuclear power. The problem, however, is that these areas are more in favour of Russia.

One of the prominent suggestions that analysts often give is that, in addition to the existing areas of collaboration, both the countries have to dwell deeper and identify other areas where they can both contribute. For instance, in the past, the Soviet Union had focussed on the growing industrialization needs of India and had a big hand in ndustrializing the country. Russia was pivotal to India’s needs.

Similarly, today, both the countries have to zero down on areas where each can meet the other’s demand and subsequently devise strategies to enhance the relations further.

Future prospects

Some of the suggested areas where India and Russia can look at further enhancing business ties are:

Agriculture

If India and Russia decide to concentrate further on the agricultural sector in India, both the countries stand to reap collaborative benefits. While India can eye for more achievements in the agricultural sector, Russia will manage to make an entry into the smaller regions of India. A pilot project between Punjab and Haryana in India and Stavropol and Krasnodar in Russia is already underway in this direction.

Technology

India has always been interested in advanced technologies devised by Russia in the areas of air and ground transportation. India can look at commercialising these technological developments and increasing the collaboration between the two countries in this area.

Defence

This is an area where both the countries have an established relationship. In 2013, India had imported weapons from Russia to the tune of USD 4.78 billion. This relationship can be further enhanced by both the countries providing future-looking concepts and strategies that can prove beneficial to both the nations. Taking a step in this direction, India is already planning to create a modern and scientific missile defence system and Russia is ready to back it.

Nuclear energy

This is another area where India and Russia have collaborated to a great extent. Russia aiding the construction of Kudankulam Nuclear Power Project is a recent initiative in this area. Both the countries have vowed to further this relationship.

Other potential areas

The other areas that carry the potential of enhancing the bilateral trade ties between India and Russia are Information Technology, telecommunications, diamond processing, textiles, pharmaceuticals, financial services, food processing and management services. The roadblocks are scarce details, coupled with administrative and logistics issues. If these can be addressed, then the volume of trade between India and Russia can increase manifold.

Besides this, the pipeline connecting Russia and India, inking the space and military cooperation, setting up a Joint Study Group to look into the scope of the Comprehensive Economic Cooperation Agreement with Customs Union countries, which includes the Russian Federation, Kazakhstan and Belarus are all initiatives that can take the bilateral trade between India and Russia to a higher level.

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