Trade relations between India and Russia are seeing a renewed focus on local currency transactions and the balance of trade.
Speaking at the India-Russia Business Forum in Mumbai, External Affairs Minister Dr S Jaishankar underscored the importance of conducting trade in national currencies, emphasizing that this approach holds significant relevance given current global economic pressures.
Emphasis on Local Currency Transactions
“Mutual settlement of trade in national currencies is of great importance, especially in the current circumstances. Special Rupee Vostro Accounts are currently an effective mechanism. However, even in the short run, a better trade balance with national currency settlements is the answer,” stated Jaishankar. This strategy aligns with India’s aim to reduce reliance on dominant foreign currencies and create a more resilient trade framework.
Balancing Trade and Addressing Imbalances
One of the critical aspects Jaishankar highlighted was the need to correct the current trade imbalance between the two nations. “The balance of trade, however, needs urgent redressal, as it is currently so one-sided. Non-tariff barriers and regulatory impediments must be speedily addressed for this to happen,” he noted. Enhancing trade equity is essential for fostering a sustainable and mutually beneficial economic relationship.
Areas of Potential Collaboration
He pointed out several technical and industrial sectors ripe for partnership, including transport technology (such as drone development), nuclear energy projects involving high-power turbines, advancements in healthcare through medical technology and pharmaceuticals, and boosting agricultural productivity. These areas reflect India’s strategy to diversify its economic cooperation with Russia beyond traditional sectors.
Key Connectivity Initiatives
Connectivity remains a priority for India-Russia trade expansion. The International North-South Transport Corridor (INSTC) connecting Mumbai to Moscow, the Chennai-Vladivostok Corridor, and the Northern Maritime Route are pivotal projects facilitating smoother trade routes. These initiatives aim to reduce logistical challenges and enhance bilateral trade flow.
Strengthening Investment Ties
He also addressed the ongoing India-Eurasian Economic Union trade negotiations that began in March and the first Bilateral Investment Forum held in Moscow in April 2024. He emphasized the importance of expediting discussions on the Bilateral Investment Treaty, which would further bolster investor confidence and create more opportunities for economic engagement.
“The programme for cooperation regarding the Russian Far East from 2024-29 was signed in July during the Annual Summit. It encourages related activities, including in the connectivity sphere,” the minister shared. This program underlines India’s commitment to enhancing partnerships in underdeveloped regions and tapping into new areas of growth.
The Role of Special Economic Agreements
The bilateral agreement between the customs authorities of India and Russia on Authorized Economic Operators (signed in May 2024) has facilitated trade by easing customs procedures. This agreement symbolizes the collaborative spirit between the two nations to foster a more streamlined trading environment.
Cultural and Educational Ties
Beyond trade, he highlighted the broader societal connections between the two countries. “The world is moving towards ever greater multi-polarity, and devising appropriate methods of cooperation is essential,” he said, underscoring how educational and cultural exchanges, including collaborative film projects, contribute to strengthening bilateral relationships.
Minister of Industry and Trade of the Russian Federation, Denis Manturov, reinforced this sentiment: “Amid the external economic pressure, Russia-India business relations continue to strengthen, and the countries demonstrate their readiness for further cooperation.”
Upcoming Engagements
On Tuesday (Nov 12, 2024) Jaishankar and Manturov are set to meet in New Delhi for the India-Russia Inter-Governmental Commission to review ongoing cooperation and chart the path forward. This meeting, part of Manturov’s visit, emphasizes the continued commitment to nurturing bilateral trade and economic ties.
Adding to these developments, the inauguration of the Russian Business Center in New Delhi aims to foster deeper commercial engagement. Spearheaded by the Business Council for Cooperation with India and Synergy Corporation, this center will serve as a hub for events, missions, seminars, and conferences, strengthening business collaboration.