New Delhi: American sanctions on Indian firms, the trade imbalance, the settlement of payments in local currencies and transport corridors are among the key issues expected to be discussed Tuesday at the 25th session of the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC) in the national capital.
It will be co-chaired by External Affairs Minister S. Jaishankar and First Deputy Prime Minister of Russia Denis Manturov.
Manturov is on a two-day visit (11 and 12 November) to India. The first day was in Mumbai, where he and Jaishankar interacted with Indian businesses.
“Our bilateral trade is today at $66 billion. This makes the goal of reaching $100 billion by 2030 more than realistic,” Jaishankar said at the India-Russia Business Forum Monday.
However, India’s total exports to Russia are less than a tenth of its imports, according to data available for the financial year 2023-24.
India’s total exports of goods to Russia are valued at $4.2 billion, while its imports from that country stand at $61.1 billion during this time period, according to data shared by the Ministry of Commerce and Industry.
This trade imbalance is “one-sided” between India and Russia and needs “urgent redressal” through the removal of “non-tariff barriers” and “regulatory impediments”, Jaishankar said.
Another challenge for India-Russia business ties is the threat of sanctions by the United States and the West that Indian firms face due to Moscow’s 30-month long war with Ukraine.
Last week, 19 Indian firms and two individuals were sanctioned by the US for their alleged role in supporting Moscow’s “war machine”. One of the companies sanctioned by Washington was arms manufacturer Lokesh Machines Ltd, which had delivered 550 indigenously designed and manufactured machine pistols to the Indian Army’s Northern Command earlier this year.
IRIGC-TEC is the apex government-to-government forum for bilateral economic cooperation. The forum integrates inputs from different working groups on economic and trade cooperation and is chaired by India’s external affairs minister and the Russian deputy prime minister. The first session was held in 1994.
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10 developments in India-Russia ties
At the business forum Monday, Jaishankar made a pitch for closer cooperation between New Delhi and Moscow across various sectors, especially as the world is “moving towards ever greater multipolarity”.
He added that Russia had consciously focused more deeply on Asia since 2022 and this has created many more avenues of cooperation.
“A partnership between an India that has an 8 percent growth rate for multiple decades ahead, and a Russia that is a key natural resources provider and a major technology leader, will serve both of them and the world well. Keeping that in mind, let me highlight 10 significant developments that we need to take note of,” Jaishankar said.
The 10 developments of India-Russia economic ties outlined by Jaishankar include the goal of achieving trade worth $100 billion by 2030, addressing impediments to bilateral trade, a trade in goods pact with the Eurasian Economic Union (EAEU), the need for a bilateral investment treaty, projects in Russian Far East, the positive impacts of a customs pact signed in May, connectivity corridors, Russian investment in the Indian manufacturing sector and the importance of cooperation in non-economic domains such as education and cinema.
Trade deficits & economy on agenda
Trade between the two countries has been on an upward trajectory since Russia’s war with Ukraine began in February 2022. In the year before the Russia-Ukraine war began (2021-22), the value of the trade in goods between New Delhi and Moscow stood at $13.1 billion.
In 2022-23, the total value of the trade in goods touched $49 billion, which expanded to $65.4 billion in 2023-24.
According to data available for the 2024-25 financial year between April and August, total trade has already touched $30 billion. However, the trade deficit is at $25 billion in favour of Russia.
The trade deficit figured in talks between Prime Minister Narendra Modi and Russian President Vladimir Putin during the 22nd India-Russia Annual Summit, which took place in Moscow in July.
The settlement of trade in local currencies is also expected to figure at the summit.
Last year, Russian foreign minister Sergey Lavrov highlighted how the country had billions of Indian rupees but had no avenues to use this money because it needed to be transferred to another currency.
While the situation has since improved, Jaishankar once again highlighted that the “growing appreciation” of India’s ‘Make in India’ programme by Russian firms will “help take forward” cooperation across numerous domains.
The backdrop of India’s growing economic ties with Russia is its war with Ukraine, which has been good for India’s oil imports. However, in the past few weeks, New Delhi has been more public about its role in attempting to bring Moscow and Kyiv together to discuss a route to peace.
Last week, Jaishankar, during his visit to Australia, highlighted Modi’s personal initiative of meeting with Putin in Russia in July, followed by a historic visit to Kyiv, where he met with Ukrainian President Volodymyr Zelenskyy.
Modi met with Zelenskyy once again in September at the margins of the United Nations Summit of the Future and held a bilateral meeting with Putin on the margins of the BRICS summit in Kazan last month.
“We are hoping that through multiple conversations, we will be able to create some common ground so that some beginnings of diplomacy can resume,” Jaishankar said during an interaction with the Indian community in Brisbane last week.
(Edited by Radifah Kabir)
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