Indo Russian trade set to increase many fold
India has been in discussions with the Eurasian Economic Union (EAEU) trade bloc. The EAEU includes Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. An EAEU FTA agreement would be useful for India as it is unlikely Indian manufacturers supplying the domestic market would endure serious competition in their own backyard from Russian exporters. Presently Russia is responsible for about 90 % of all trade from EAEU.
India has also shown interest in sourcing organic fertilizers from Russia, in view of the fact that New Delhi has stated its intention for India to develop as a major grain and wheat exporter. There is a huge potential grain market as the global supply chain created by the Ukraine conflict – both Russia and Ukraine are major wheat suppliers – has been totally disrupted.
India is rolling out measures presently to try and take advantage by ensuring that government approved laboratories adequately test the export quality, making additional rail wagons available, and working with port authorities to give priority to wheat exports. India has an advantage of surplus stocks at home and a sharp rise in global prices. So far, the organisation appears to be Working. Indian wheat exports picked up in 2021 to reach 6.12 million tonnes, up from just 1.12 million tonnes the previous year. For 2022 target is set for export of 10 million tonnes of wheat after the new harvest in June/July.
Apart from the above, India and Russia had recently signed more than two dozen deals across a variety of sectors. The 28 agreements concluded during Russian President Vladimir Putin’s visit to New Delhi during the 21st India-Russia annual summit in December 2021 to upgrade bilateral trade.
The deals cover a wide range of areas including trade, energy, science and technology, education, and intellectual property. India and Russia have also signed a program of cooperation in the field of defence for the next ten years, 2021 to 2031, and have also set targets for INR 225000 Crores in trade and INR 375 000 Crores in investment by 2025.
India is also tying up shipbuilding activities between Vladivostok and Gujarat for design and building of the next generation of oil and gas tankers. This is with an eye on not just Arctic capable shipping but also to service the International North-South Transportation Corridor (INSTC) requirements. The INSTC is a Suez Canal alternative route running maritime from Mumbai to Iran then multimodal north through Iran and onto Caspian Sea Ports to both Central Asia, the Caucasus and Europe.
This ‘Southern’ route is likely to prove popular as it allows goods transit from the EU to Asia without the need to transit via Russia. India has also established the Vladivostok-Chennai maritime corridor with extensions through to Mumbai with India and Russia collaborating on Indian Ocean transportation routes to supply India and Southeast Asia with LNG supplies from the Yamal fields in the Russian arctic – along the Northern Sea Passage. This was the ancient trade route where the Chinese had always played second fiddle to the Indians.
India and Russia have jointly stated that they intend to upgrade the defence cooperation, including facilitating joint development and production of military equipment, components and spare parts, enhancing the after-sales service system, progress towards mutual recognition of quality control and regular joint exercises of the Armed Forces of the two countries.
Russia is still one of India’s largest arms suppliers accounting for 23% of Russian arms exports between 2016 and 2020. Foreign Secretary Shringla has stated that Russia has started delivering its long-range S-400 surface-to-air missile defence systems to India, based on a deal the two countries signed in 2018. Supplies have begun and will continue to happen. He said “It is important to note that, whether it is us or Russia, we conduct an independent foreign policy and I don’t think we need to look at our relationship in the light of any other relationship that is there.” The two countries have also signed a deal to locally manufacture more than 600,000 Russian AK-203 assault rifles in India.
Shri Bidden ji can keep having fits and keep throwing tantrums with CAATSA use, India will not bat an eyelid.
India’s Foreign Secretary Harsh Vardhan Shringla said the two countries had also signed other investment pacts, including deals on steel, shipbuilding, coal and energy. Russian oil company Rosneft said it signed a contract with Indian Oil to supply up to 2 million tons of oil to India by the end of 2022. The countries also signed a MoU for Russia to send an uninterrupted supply of coal to India to support its steel production, among other deals. Putin and Modi also discussed the situation in Afghanistan, voicing their commitment to ensure that the country will never become a safe haven for international terrorism.
India is also negotiating investments of between INR 15000Crore in Russian oil and gas exploration and production projects with the Russian government, with Moscow offering several oil and gas fields to India’s natural resources exploration firm ONGC Videsh and to any potential consortium it may form for the project.
The countries are also in talks over India’s investment in oil and gas exploration projects in the Arctic, including the development of the Vostok Oil project. The project’s annual crude production could be up to 100 million tons, according to preliminary estimates. Three Russian Far Eastern regions, namely Yakutia, Sakhalin Oblast and Amur Oblast, have so far shown interest in investment by India in their oil and gas sectors, with negotiations continuing.
Russia has asked India to increase its investments in the sanctioned country’s oil and gas sector, as well as to develop Russian companies’ sales networks in Asia’s third-largest economy. Since the Ukraine conflict broke out, Russian oil producers are offering a 25-27% discount on dated Brent crude prices. Rosneft, Russia’s state-owned oil company, is already one of India’s largest crude suppliers, and together with the Indian Oil Corporation signed a contract for the supply of up to 2 million tonnes of oil to India through Novorossiysk Port on the Russian Black Sea by the end of 2022. That would be accessible via the INSTC.
India has been attempting to diversify its oil import sources away from the Middle East by turning, in part, to Russia. Discounted oil will clearly be a blessing for India’s economy at a time when global crude prices have risen to their highest levels since 2008.
With the Ukraine conflict about to enter its second month, Asian geopolitics have been turned upside down. India, along with several other Asian nations, has refused to get involved and has abstained from UN votes against Russia in recent weeks. The reasons for this are the Independent Indian policies along with recently improving trade and geopolitical relevance between the two countries as stated above.
