Moscow matters

Prime Minister Manmohan Singh is visiting Russia and having summit with President Putin on 21 October. Less than a month after his bilateral talks with the US President Barack Obama, the Moscow meeting has assumed special significance for the Indian Government and especially for the Indian Prime Minister who is currently at the fag end of his second term in office.

In the last few years, despite summit level talks every year, India and Russia have not been able to give a real big push to their economic relations though both the countries have a broad common understanding on the current political issues of the day. The differences over the application of the nuclear liability act to the proposed two new units at Kudankulam cast its shadow over the fast growth of the economic relations between the two countries though there are common areas for faster collaboration. This has to be corrected during the 21 October summit and the indications so far available suggest that there are major initiatives in expanding the areas of economic cooperation between the two countries.

The breakthrough this time is possible in the areas of investment in infrastructure, energy and civil aviation. The two countries have already agreed to set up a joint study group for an oil pipeline from Russia to India across the former Soviet central Asia, Afghanistan and Pakistan. The proposed pipeline will be separate from the TAPI project in which US Government is very interested. India and Russia are also expected to collaborate in oil and gas on the Yemal peninsula in North West Siberia.

Manmohan Singh is taking up the issue of high speed trade and investment cooperation between India and Russian Federation during the next five years in the course of his discussions with President Putin. PM is reported to have told his officials participating in the preparatory talks that both the Government sector and the Indian private sector should join hands to give a big boost to the trade and investment and he mentioned that the Indian companies should show the same level of energy in trade with Russia as they are presently showing regarding China.

 As of now, on the eve of the Summit, indications are that the Indian side will strongly pitch for Russian investments in Delhi-Mumbai Industrial Corridor project since this project requires massive investments and high technology. Russia has got the requisite technology and the Indian side is very much pressing the Russian side for agreeing to invest in this mega project. The details of the nature of participation will be decided once the Russian side takes an in principle decision on investment.

 Similarly, the Indian side is highly interested in investing in the new oil fields of the Russian Federation. Already, the areas have been identified and where the bidding process has started, Indian side has taken the move as per the requirements. India wants that President Putin should give big emphasis on this particular collaboration in the oil and gas sector in view of the need for both the countries to strengthen energy security. India is ready to partner Russian companies in bidding for oil fields in the third countries or even in exporting oil from the jointly produced ventures. In fact, the ONGC and the petroleum ministry officials say that Indian PM has been specifically told to make a success of the Indian bid for big collaboration in the oil sector between the two countries in the coming days.

 As regards DMIC project, so far six projects have been cleared with projected investment of Rs. 1.10 lakh crore. The projects include Integrated Industrial Township at Greater Noida, Improvement of water Supply System to Pithampur-Dhar-Mhow Investment region in Madhya Pradesh, Integrated Multi modal Logistics Hub in Haryana and Construction of New Rail Line from Bhimnath to Dholera.

For Manmohan Singh, the most delicate issue relates to the Nuclear Liability Law and the Russian objection to bring the proposed Kudankulam units under its purview since the agreements were signed much earlier. Indian officials are making all efforts to convince the Russian side that the Nuclear Liability Law is an act of Parliament and it has to be applicable to all the nuclear power plants under discussion including those of US, Russia and France. But sources say that some formula is being worked out to take care of the Russian position of the proposed third and fourth units of Kudankulam plant.

As the position stands now, there is the possibility of signing a general framework agreement (GFA) between India and Russia to identify the areas which need immediate attention from two sides for facilitating early solution. The discussions on the Kudankulam projects will be a part of that and efforts will be made by the Indian side to mollify the Russian side by hiking the costs of the two new nuclear power projects. The framework will be ready to facilitate early successful discussions. Indian side is hopeful that the Russian side will be reasonable in quoting hiked amount so that it becomes feasible for the Indian side to agree to the costs. India and Russia on 17 July last year inked a deal for the new reactors for the Kudankulam project with Russia agreeing to provide India with a state credit of US$ 3.4 billion for works supplies and services for construction of the new reactors and related fuel supplies.

India has taken note of the Russian position that India had no legal regime for nuclear liability when the inter governmental agreement was signed by India  and Russia in 1988 or when the JSC Atomstroyexport and NPCIL clinched the deal for the first two reactors in 2002.Russian official emphasized that the two new reactors it wanted to supply to the Indian Government, were the continuation of the partnership agreed upon by two countries in 1988 and 2002 and these two plants can not be brought under the ambit of the Nuclear Liability Act. The Act was effective in November 2011. India is ready for the renegotiation on the new pricing of the third and fourth reactors but the parameters will have to be satisfactory for India and for that Indian officials feel that this should be taken as a part of the bigger India-Russia initiative for a new era of partnership

Both the Indian Prime Minister and the Russian President will have to show vision and enough flexibility to sort out the delicate issue of the problems related to the new units of the Kudankulam project. Even if the solution takes time, that should not delay the process of faster collaboration in energy and infrastructure apart from taking steps to jointly produce passenger aircraft and helicopter design centre. Manmohan and Putin have to ensure that some path-breaking steps are taken at the summit to restore India-Russia