New Delhi: India and Russia are discussing a Free Trade Agreement (FTA) to improve bilateral trade and cooperation, said Russian Deputy Prime Minister Denis Valentinovich Manturov at the India-Russia Business Dialogue held Monday.
Speaking at the event held in New Delhi, External Affairs Minister S. Jaishankar mentioned that negotiations on a “new bilateral investment treaty” — that will be mutually beneficial and bring in investor confidence — were on between the two countries. He also noted the strategic significance of India-Russia partnership, calling it “one of the steadiest relationships in the world in the contemporary era”.
India’s previous discussions on an FTA with the Eurasian Economic Union (EAEU) countries — Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia — was interrupted by the Covid-19 pandemic.
During his keynote address, the deputy PM emphasised on Russia’s willingness to remain open to cooperation with the world and called being disconnected from the world a “bad habit”.
“We are not aiming to become 100 per cent autonomous or disconnected from the world. It is simply not possible. It will only make us incapable of competing with other countries,” he said.
The deputy PM, who also serves as the Minister for Industry and Trade for the Russian Federation, is on a two-day visit to India to attend an intergovernmental meeting on trade, culture and science and technology. He is scheduled to meet Jaishankar Tuesday to discuss a range of issues — from payment solutions to increased connectivity and more.
At the Monday event — organised by Federation of Indian Chambers of Commerce and industry (FICCI) jointly with the Russian Business Council for Cooperation with India — the media was allowed to attend only the keynote addresses by the two leaders.
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Russia-India trade
Russia and India have shared strong bilateral ties over the past few decades which have increased significantly since the Russian invasion of Ukraine last year.
India has been importing substantial amounts of Russian crude oil at discounted prices over the past year, displacing Iraq last month as the country’s top supplier of oil. Indian imports of Russian oil soared to a record 1.6 million barrels per day in February this year.
Jaishankar stated that bilateral trade between the two countries had crossed the 2025 target of $30 billion, crossing $45 billion in 2022-2023. He added that he expects these figures will continue to grow.
Rajya Vardhan Kanoria, former President of FICCI, noted Russia’s efforts to trade in the Indian rupee, becoming one of the first countries to do so in December last year, after the Reserve Bank of India (RBI) allowed countries to trade in the national currency.
“Almost 20 Russian banks have opened Special Vostro Rupee Accounts to enable rupee trade between the two countries,” he said, calling the development “encouraging”.
Jaishankar also noted the “understandable concern over the trade imbalance” between India and Russia after India’s trade deficit, according to reports, rose to $20.05 billion in September last year. He emphasised on the urgent need for the two countries to work together to address this by tackling the obstacles in market access, payments, logistics and certifications, among other things.
Similarly, Manturov noted his country’s interest in “quality increase in trade and cooperation” between the two countries, and in exploring possibilities in increasing Russian imports of Indian goods, such as pharmaceuticals, machinery and stainless steel.
“We need to find niche gaps in trade and products that India can fill. India produces chemicals including pharmaceuticals that have been supplied to Russia but there is still a lot of potential here. Therefore, we would like to offer India this great opportunity to fill this gap,” he said. Russia is currently the fourth-biggest market for Indian pharmaceuticals.
Jaishankar noted India’s export potential in non-traditional avenues of trade, such as auto and spare parts, electronic goods, medical devices, high efficiency solar modules, textile, apparel, agricultural and more.
‘Russia’s policy of seeking the far East’
In terms of Russian investment in India, the deputy PM emphasised on the significance of the International North-South Transport Corridor (INSTC) as an avenue of investment and also focused on India’s crucial role in developing this route. Apart from the INSTC, the two countries are also developing connectivity through the Eastern Maritime corridor or Chennai-Vladivostok Maritime Corridor, he said.
“There is synergy between the two countries in the development of these corridors. The Maritime corridor fits in with our Act East policy and Russia’s policy of seeking the far East as an additional driver of the economy,” said Manturov.
Apart from bilateral trade, the two leaders also mentioned the need to improve tourism between the two countries and said they will discuss visa regulations during this two-day meet. Currently, India receives only 1 per cent of Russia’s outbound tourism.
Sergey Cheremin, Chairman of the Board of the Business Council for Cooperation with India and Minister of Dept. of Foreign Economic Activity and International Relations, Moscow City Government, noted that Moscow will work on increasing flights to India.
He also said that Moscow is in the process of signing programmes with Maharashtra and Uttar Pradesh for cooperation between governments. “Such interaction will prove that Russian partners are interested in using our expertise in modernisation of infrastructure, digital solutions for education and more.”
Manturov also invited India to attend the international industrial exhibition INNOPROM — in which India was once a partner country — between 10 and 13 July this year in Yekaterinburg, Russia.
(Edited by Zinnia Ray Chaudhuri)