India, Russia: interlocking of giant emerging economies

Font Size

Print

Feedback

Email

Discuss

: The Indian Prime Minister Manmohan Singh indicated during last July’s G-8 Summit in St Petersburg that he wanted to force the pace of Indo-Russian cooperation. The PM remarked that, “The economic pillar of our strategic relationship needs attention, as at present it is not as strong as it should be.” He, and others, have also noted that both economies have been logging up good rates of growth, something that could lay the foundation for more substantive economic cooperation between the two. In trade, especially, the PM’s lament in July 2007 was that too little has been achieved: no more than an annual turnover of around $2-3 billion. That just was not good enough.

The bilateral trade figure has since been revised, and stood at $5 billion early this year. Also, that got noted during the Second Indo-Russian Forum on Trade and Investment in February, this year. But even that is much below potential. Other trade-inhibiting factors include credit risk, the high cost of Export Credit Guarantee Corporation (ECGC) cover, insurance and the Russian ban on farm imports. Meanwhile, it is reported that commerce is plagued by procedural hurdles (visa problem in particular) and that primarily is what has retarded the pace of expansion. Now, however, the two economies are working towards a target of ‘$10 billion by 2010’ in bilateral trade.

One may even say that they have been acting fast. February 13 saw them announcing the setting up of a joint task force to ensure greater, and smoother, flows of trade and investment. The agreement, reached during Russian PM Viktor Zubkov’s visit to India, aims to enhance economic relations, reaffirms strategic and defence ties.