The recent visit of Russia’s Deputy Prime Minister to India marked the convening of the 24th Russia-India Inter-Governmental Commission (IGC) meeting. Russia has revealed its intentions towards importing manufacturing equipment from India, including machinery that could serve as alternatives to those of Western origin.
Key Highlights of the Meeting
The meeting between India and Russia witnessed both countries engaging in a comprehensive review of their defense cooperation. This cooperation, however, is under stress due to difficulties in deliveries and payments influenced by the ongoing Ukraine war. The discussion revolved considerably around India’s prospective plans for Russia’s far eastern region — an area deemed crucial to Russia’s Indo-Pacific strategy.
Ways to provide additional impetus to bilateral trade were also deeply delved into, with efforts focusing on identifying fresh industrial points for boosting trade between the two nations. Given the current trade imbalance favoring Russia, both parties explored strategies to establish more balanced trade relations. Furthermore, a plethora of issues related to bilateral economic and humanitarian cooperation were discussed during the meeting, including areas like technology, energy, healthcare, and education.
Status of India-Russia Trade Relations
With a substantial bilateral trade standing at approximately USD 13 billion in the fiscal year 2021-22 and USD 8.14 billion in the year 2020-21, Russia enjoys the robust rank of being India’s seventh-largest trading partner. This is a considerable leap from its 25th position back in 2021. Countries surpassing this volume of trade with India in the initial five months of 2022-23 include the US, China, UAE, Saudi Arabia, Iraq, and Indonesia.
Concerns Regarding Bilateral Trade
Presently, the trade imbalance stands as a significant concern in the bilateral trade relation between India and Russia. Figures reveal that while India’s imports from Russia amounted to a massive USD 17.23 billion, exports to Moscow were valued at only USD 992.73 million. Consequently, this has resulted in a negative trade balance of USD 16.24 billion in 2020-21. The crux of the trade imbalance can be traced back to the sudden spike in imports from Russia, including oil and fertilizers, which started surging early in 2022.
Addressing Trade Imbalance Between Russia and India
Authorities from both countries have recognized the need to augment Indian imports, particularly in the machinery sector where India boasts advanced production capabilities. They are also contemplating the Rupee-Ruble exchange mechanism to insulate bilateral trade from the repercussions of western sanctions. The possibility of identifying additional industrial points for propelling trade and negotiating a Free Trade Agreement is also being considered.
Exploring Different Aspects of Indo-Russia Relations
The Indo-Russia relations date back to the Cold War era, with the two nations sharing a robust strategic, military, economic, and diplomatic relationship. Even after the dissolution of the Soviet Union, Russia preserved its close ties with India. However, these relations have witnessed a steep decline over recent years, especially in the post-Covid scenario, primarily due to geopolitical issues arising from Russia’s close association with China and Pakistan. Besides this, the Indo-Russian defense and security relations comprise regular conduct of the Tri-Services exercise ‘INDRA’ and joint military programs, including the BrahMos cruise missile program, Sukhoi Su-30MKI program, and the nuclear energy initiatives like the Kudankulam Nuclear Power Plant (KKNPP).
