In an historic first, the India-Russia Strategic Economic Dialogue was initiated in St. Petersburg, Russia. This novel venture aimed at fostering greater synergy in investment and trade between the two nations. The inception of this dialogue came as a resolution during the 19th India-Russia Annual Summit which took place in October 2018 in New Delhi.
Heading the Indian delegation was the Vice Chairman of NITI Aayog, while the Russian side was under the leadership of their Economic Development Minister. Pioneering this strategic dialogue are five key areas of focus: Transportation Infrastructure, Agriculture and agro-processing sector, Digital Transformation & Frontier technologies, Small and Medium Business support, and Industrial and Trade Cooperation. By addressing challenges such as connectivity, weak banking ties, cumbersome regulations, distance, and Russia’s restrictive visa regime, this dialogue aims to boost trade between India and Russia.
Key Topics Discussed
The dialogue revolved around an assortment of topics including the prompt activation of the International North-South Transport Corridor (INSTC) route and the organization of its coordination council. There was also talk about improving India’s Inland Waterways with Russian collaboration and setting up special techno-parks to attract Russian investments.
Matters of mutual concern such as market restrictions and access for textiles, diamonds, and agri-products, along with establishing broader dialogues on national currencies were also broached. The dialogue saw joint action plans by Public and Private sectors in supporting Small and Medium Enterprises (SMEs), including the formation of an information exchange mechanism to facilitate credit access, market learning from best practices, and mutual recognition of companies.
On the digital front, potential cooperation in Financial Technology, Artificial Intelligence(AI), blockchain system, and Quantum computing were discussed. Pilot projects in the healthcare sector, Tourism, projects for third-country markets, and joint investment in projects in the far eastern region of the Russian Federation were also on the table.
Significance of the Strategic Economic Dialogue
With a rich history of strong ties with the former Soviet Union during the Cold War, the downturn in the India-Russia relationship has been a cause for concern. Despite Presidential summits and an “annual” summit since 2000, the trade between India and Russia only amounts to an insignificant 1% of each other’s total trade volume. The Ukraine crisis in 2013 further distanced the countries as it led Russia to increase its proximity with China.
Important Facts about India-Russia Trade
| Fact | Value |
|---|---|
| Trade Value (2017) | $10 billion |
| Percentage of each other’s total trade | 1% |
| Next Round of Strategic Economic Dialogue | End July/August 2019 in India |
Paving the Way Forward
The Strategic Economic Dialogue marks a significant step in rejuvenating the economic links between India and Russia. Concrete measures such as the International North-South Transport Corridor (INSTC) are aimed at resolving the connectivity issue between the two countries. There is an urgent need to expedite free trade negotiations between India and the Russia steered Eurasian Economic Union (EEU).
The EEU was initiated in 2015 to ensure the free movement of goods, services, capital and workforce within its borders. A finalized Free Trade Agreement (FTA) with the EEU, aided by the INSTC, could potentially increase the India-Russia trade manifold. The dialogue seeks to bolster the bilateral relationships and carve a path towards a stronger economic partnership, bringing strategic character to their relationship.