India-Russia ties multifaceted, but more ballast is needed on the economic front

The need is to address whatever barriers there are for closer economic engagement. Logistical difficulties in terms of the lack of direct transportation routes and inadequacy of banking linkages are perhaps the two most important barriers. A higher level of engagement is also possible through greater investments in each other’s economies.

It has been two decades since both nations signed a historic declaration on a Strategic Partnership and more than decade since it was elevated to a Special and Privileged Strategic Partnership.
It has been two decades since both nations signed a historic declaration on a Strategic Partnership and more than decade since it was elevated to a Special and Privileged Strategic Partnership.

India’s relations with Russia may not have the scope and depth of its alliance with the erstwhile Soviet Union, but they remain time-tested, reliable and warm. It has been two decades since both nations signed a historic declaration on a Strategic Partnership and more than decade since it was elevated to a Special and Privileged Strategic Partnership.

At the 21st Annual Summit between the leaders of both nations, they reaffirmed their commitment to the Special and Privileged Strategic Partnership to take forward a broad-based engagement on various areas of cooperation including political and strategic, economy, energy, military and security, science and technology, culture and humanitarian cooperation. A clutch of 28 agreements were signed, 19 of which are commercial in nature, ranging from defence to scientific cooperation.

An important showpiece of Russia’s commitment to help India is in nuclear power generation and defence. Russia is building the 6,000-MW project at Kudankulam in Tamil Nadu, which will have six VVER-1000 nuclear reactors, and is in talks with India to construct more reactors at a new site that is yet to be identified. Two reactors are currently operational and work has begun on the fifth of six reactors at Kudankulam. Both countries have an ambitious vision for building at least 10 more reactors with the highest standards of safety in India.

In the joint statement at the end of the 21st Annual Summit, both sides noted the significant progress achieved in the construction of the remaining nuclear power plant units at Kudankulam and the importance of continued further discussion on the second site.

Defence, of course, is a big-ticket item for bilateral cooperation as India extensively uses Russian weaponry. In a major boost to Make in India initiative, at the 17th Annual Summit in 2016, Russia offered to fully manufacture its most advanced helicopters, Kamov-226 T, in the country, including the possibility for exports to third countries. Deals then were also concluded for the procurement of five units of S-400 Triumf air defence system besides constructing Talwar-class frigates under Project 1135.6 in Russia and India.

On March 2019, PM Narendra Modi announced a joint venture to manufacture AK-203 assault rifles in Amethi at an investment of $687 million. As India’s defence sector has been opened up for foreign participation, it has requested Russia to set up manufacturing facilities for spares and components in the country.

However, the weakest link in Indo-Russian relations is in the economic sphere. Bilateral trade amounted to only $10 billion in 2019-20 which later suffered due to pandemic-related restrictions to $8.1 billion in 2020-21 and $6.1 billion in the first half of the current fiscal. The joint statement correctly noted that “bilateral trade does not reflect the potential of strength and depth of India-Russia strategic partnership” and stressed upon the need for greater efforts to raise bilateral trade to $30 billion by 2025. Targets, however, are easy to set but difficult to achieve.

The need is to address whatever barriers there are for closer economic engagement. Logistical difficulties in terms of the lack of direct transportation routes and inadequacy of banking linkages are perhaps the two most important barriers. A higher level of engagement is also possible through greater investments in each other’s economies. No doubt, an area where bilateral ties can acquire fresh ‘energy’ is oil and gas cooperation, coking coal supplies and specialty steel production. Indian oil and gas companies are keen to expand their investments in Far East Russia. The Indo-Russian relationship is multifaceted but more ballast is needed on the economic front to realise the potential of a Special and Privileged Strategic Partnership.

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