Russian President Vladimir Putin would be among the top international dignitaries visiting India, this month. This visit is taking place at a time when Russia is deep in the woods owing to tumbling oil prices, sanctions over the Ukraine crisis and rising inflation which is expected to hit nine per cent by the year-end. In comparison, India with its economy showing signs of recovery is seen as major investment destination centre in the world.

Putin: Keen on Expanding Ties with India

Putin, who is visiting India expectedly by December 11 for annual India-Russia summit, has his eyes set on expanding the base of his country’s trade and investment with India. Delhi too, given the ban imposed by the European Union and the US on trade with Moscow, is looking for an opportunity to fill the gap in Russian market with its goods and services, especially in pharmaceuticals, information technology, textile and agro-products. If sources are to be believed, the two countries are likely to sign a slew of agreements in spheres of defence, energy, nuclear, space, infrastructure, education and trade and commerce. Free trade agreement would also be signed during the visit. The two-way trade between the two countries that stood at $6 billion in 2013-14 is currently over $10 billion, which is not even one per cent of India’s total trade.

Parleys on Rupee-Rouble Trade

Officials from MEA say Delhi is all set to discuss the issue of conducting trade in the respective country’s currency, a model which existed between the two nations in the Soviet era. If the issue gets concretised, it would lead to a significant increase in the volume of bilateral trade between the two countries. In the course of Prime Minister Narendra Modi and Russian President’s first meet on the sidelines of the BRICS summit in Brazil, the two-way trade in goods and services in rupee-rouble had also been broached. Since then the Reserve Bank of India together with Russia’s Central Bank set up a joint working group to work out modalities. Talks are also on between the Export-Import Bank of India and Russia’s Vnesheconom Bank to work out an arrangement by which Delhi and Moscow would facilitate loans in local currencies for investment in each other countries.

Russia: Looking to Enhance Defence Equipment Supply

Russia, currently the second largest supplier of defence equipment in India after the US, is keen on to regain its numero uno position in the country’s defence market. But Delhi is concerned about Russians’ failure to stick to delivery time of a product. Due to this, the cost of a product spirals up, causing huge drain on the country’s exchequer. “We don’t want repeat of Admiral Gorshkov (rechristened as INS Vikramaditya) case to happen again. We sealed the deal for this Russian aircraft carrier in 2004 and it was scheduled to be inducted into Indian Navy in 2008, but it took 10 years for its formal induction into the country’s navy. By that time its cost also jumped up manifold. It cost us $2.35 billion,” a senior diplomat requesting anonymity said. Also, the defence related issue that could be raised with Russian President Putin is about the stealth fifth-generation fighter aircraft (FGFA). It should be noted that India wants 127 FGFA to be built jointly between the two countries. After inking the preliminary design contract for this multi-role stealth aircraft with Moscow in December 2010, the final design contract was to be signed in July-August 2012. But with this deadline already crossed, India which has already spent $295 million on this aircraft project is “deep in angst” with the delay. It wants stealth aircraft to be inducted by 2022-23 in any case and this has been sounded to Russian authorities by Delhi. The country’s defence is also looking for Russian artillery guns and other sophisticated equipment and all this, however, under “Make in India” brand.

Smart Cities: India Looks to Russia for Expertise

India seeks Russian investments in railways, smart city projects and in building of ports. During Putin’s visit agreements on these areas are likely to be inked. It is said that Sistema, a Russian conglomerate which has a stake in IT to infrastructure and other areas, has shown interest in developing smart cities.

Nuclear Energy: India Keen to Engage Russia

Besides, nuclear is going to be next major area after defence, where the two countries are expected to sign some deal. It should be noted that Russia that has no problem with India’s nuclear liability law, has already committed to building Kudankulam III and Kudankulam IV projects in Tamil Nadu. Nuclear is part of India’s energy basket comprising oil and gas. Russia possesses the world’s second-biggest natural gas reserves and is among the world’s largest oil producers. Thus at a time when the US and Europe led sanctions have started imperiling its economy, it is looking towards India and China to overcome the problem it is facing. To this effect, oil and gas are two sectors where the two countries are likely to sign a deal. The ONGC and Russia’s OAO ROSN are likely to sign agreement for exploration of two Russian oil and gas fields. Also, the issue of supply of gas from Russia’s southern border or Central Asia may also figure in the talks. It is said that Delhi is ready to spend $40 billion for bringing gas from Russia through pipeline.

To ensure that Moscow does not lean heavily on China or Pakistan, India would like its bilateral engagement with Russia to touch a new high as fallout of Putin’s visit.