India-Russia economic ties must expand

Seventy years ago, India and Russia established diplomatic relations. The Soviet Union helped India in many ways to become more self-reliant and was a true partner of India. But in recent years India started distancing itself from Russia though Vladimir Putin continued to show his friendly attitude. Nevertheless what is significant and interesting is that the two countries are gearing up to celebrate the 70th anniversary of the establishment of diplomatic relations between India and Russia in 2017. Both sides have pledged to make 2017 a special year in the history of their ties.

As a strategic move to further strengthen the relation, the Prime Minister Narendra Modi will be attending St Petersburg international economic forum, held from June 1 to 3, as Guest of Honour. Russia was assigning a "high priority" to Modi's visit. During his visit Modi will convey to Putin, India's concerns on Moscow inching closer to both Beijing and Islamabad despite the decades-long strategic partnership and close friendship it has with Moscow.

But to be accurate enough Modi also to do some introspection; what made Russia move closer to China and Pakistan. Modi ought to realise that capitalist economy was facing crisis and the world order was changing. In this background surrendering to the American wishes would prove to be detrimental to the country's interest.

During the last two years of Barrack Obama in office, the Modi government made every move to identify India with the American interest.

The matter of the fact is that Defence Minister Manohar Parrikar ignored the interest of the country and signed defence deals detrimental to the interest of the country. Indian rulers forgot that the America's domestic crisis was taking a nasty turn and Obama has lost support in the bureaucracy and political circle of the USA. This was manifest in his losing his battles in Iraq or Syria. He was losing people's trust.

Nevertheless, the victory of Donald Trump and his moves to tighten the issuance of visas for foreign workers that count Indians and Indian firms as their biggest beneficiaries has unnerved the Indian government. While addressing the Congress, he changed his tenor, but it was not reassuring for India. Sceptical of Trump's obduracy, the Indian Prime Minister and his think tank preferred to renew the strategic friendship with Russia.

It was a known fact the Modi-Obama Republic Day romance won't last as India's relationship with the US does not have the kind of strategic dimension. America is a place where Indians migrate to for a better living. It was naïve to believe that Obama's visit to India and his having tea with Modi will transform the Americans. Modi ought to have remembered that Americans have their interest at the top of their minds.

Both India and Russia have acquired a new self-confidence arising out of their rapid economic growth when many capitalist countries are suffering from an economic recession. India must realise that Russia is reasserting itself on the international sphere. India-Russia cooperation, particularly in the defence sector, is the strongest link. Even today, around 50 per cent of defence equipment used by the Indian defence forces is of Russian origin. Russia remains India's largest supplier of military equipment despite the entry of US and Israel. Indo-Russian energy cooperation is also expected to get a boost in the coming years.

According to the International Energy Agency, India would be the third largest energy consumer in the world by 2025 after US and China. Russia is destined to play a vital role in ensuring India's energy security in the coming decades. India is an energy deficient country, and Russia is energy surplus, and therefore, a mutual interest lies in this sector.

Ironically, the weakest link in Indo-Russian cooperation remains trade and economic ties. Trade between the two countries is extremely low. India and Russia are already trying to boost the economic partnership through Comprehensive Economic Partnership Agreement (CEPA). Russia's move to encourage the promotion of groupings like RIC (Russia-India-China), BRICS (Brazil-Russia-India-China-South Africa), as well as SCO (Shanghai Cooperation Organisation) is intended to create a forum outside the Western block where India and Russia along with other countries can discuss issues without western pressure.

India should look to Moscow as a pillar of stability amid global uncertainty following Trump's election. The announcement of Modi's dates for a visit marks a break from the foreign office's practice of not confirming dates for Prime Ministerial trips till at most a week before the visit. This underlines the renewed emphasis on ties with Russia.

Ties between Russia and India, both bilaterally and within the context of multilateral formats like the G-20, BRICS, Shanghai Cooperation Organisation and RIC (Russia, India, China), formed the cornerstone of the foreign policies of both countries in 2016. The economics of the engagement is also significant, with Russia still facing Western sanctions and India in a phase of uncertainty after demonetisation of its high-value currency.

In its just unveiled 'Foreign Policy Concept' for 2016, Russia committed to further strengthening its special privileged partnership with India based on the convergence of foreign policy priorities, historical friendship and deep mutual trust, primarily in trade and economy."An old friend is worth two new ones", Russians are fond of saying. An ancient Indian wisdom goes: "Do not cut the thread of friendship; for if it has to be tied again, a knot will remain". What the West wants is to box India in the peaceful category and emasculate its warlike spirit. If Indians remain, peaceniks, then it would be easier for the West to penetrate it yet again.

The "Strategic Partnership" between Russia and India was upgraded to the "Special and Privileged Strategic Partnership" in December 2010 during the visit of Vladimir Putin to India. The "Druzhba-Dosti" Vision was signed in December 2014 for strengthening the Indian-Russian Partnership over the next decade. However, despite these the Indian-Russian trade and economic linkages remain weak. Total bilateral trade is about $6.7 billion (2015), which is extremely low. While Russia makes up just 1 per cent of India's total trade, India accounts for only 1.2 per cent of Russia's overall trade (2015-2016).

In order to address these challenges and realise the trade and investment targets that have been mutually set, India and Russia should take the lead in finalising the India-Eurasian Economic Union (EEU) Free Trade Agreement (FTA), encompassing trade in goods, trade in services and investment, which would serve as a catalyst for enhancing the levels of economic linkages - not just between India and Russia, but also in a wider context of the Eurasian region.

India's embrace of Washington triggered suspicion in Moscow, especially over the past few years as tensions between the US and Russia spiralled over Ukraine, Syria, and most recently, accusations of attempts at interfering in American elections.

But with continuing uncertainty over Trump's policies on trade and the Asia Pacific, and his possible strikes against Indian information technology companies working in the US, India must stretch out again to its trusted partners. Modi must restrain its ideological compulsion as it has no takers globally in the prevailing political scenario.

IPA(The views expressed are strictly personal.)