India & Russia: A Special and Privileged Strategic Partnership

Dr.Yulia Boguslavskaya*


India & Russia: A Special and Privileged Strategic Partnership

India and Russia officially proclaimed the beginning of their strategic partnership in October 2000, when the corresponding declaration was signed by Russia’s newly elected president Vladimir Putin and India`s then Prime Minister Atal Bihari Vajpayee.

Both sides recognized their special responsibility in world affairs (‘by the virtue of being among the largest multiethnic multilingual and multireligious States’) and shared a common view on how the system of international relations should be organized, i.e. the conviction that it was necessary ‘to build a multipolar global structure based on sovereign equality of all states and peoples, democratic values and justice’, as it was stated in the text of the Declaration. The authors tried to clarify the concept of ‘strategic partnership’, stipulating that it would include enhanced cooperation in the following fields: political, trade and economy, defence, science and technology, culture, countering terrorism, separatism, organised crime, illegal trafficking in narcotics, etc. India-Russia strategic partnership was not a politico-military alliance and was not directed against any other state.

The signing of the Declaration on strategic partnership was considered a major initiative in bilateral relations after the end of the Cold war intended to intensify cooperation between India and Russia. The institutional mechanism of relations was designed, containing annual summits, regular bilateral political and foreign office consultations and joint inter-governmental commissions.

During the visit of Russia`s then President Dmitry Medvedev to New Delhi in December 2010 after the review of the previous decade of bilateral relations that the latter had elevated to the level of a ‘special and privileged strategic partnership’.

After the decline in 2015-2016, trade between Russia and India is rapidly growing. In 2018, its volume amounted to little less than 11 bln US dollars enjoying the growth of 17.3 percent, according to the data provided by Russia’s Federal Customs Service. In the same year, India ranked only 17th among Russia’s trading partners. However, at the Eastern Economic Forum (EEF) – an annual international event organized by Russia since 2015 - the two countries reiterated the pledge to increase their trade to 30 bln USD. The work of ‘Invest India’ and ‘Single Window Service’ that the Russian Ministry of Economic Development is to launch will help to achieve this goal.

India’s Prime Minister Narendra Modi was the chief guest at the EEF, and the delegation from India counting 204 members was among the largest at the Forum. India-Russia XXth annual summit preceded the events of the EEF. The leaders of the two countries visited the Zvezda shipyard at the town of Bolshoy

Kamen, a shipbuilding and engineering complex, which is famous for producing larger modern icebreaking ships capable of navigating the Northern Sea Route.

Moscow highly values its cooperation with New Delhi, which is a part of a larger strategy of opening up to Asia. This strategy is by no means a mere outcome of Russia’s disillusionment with the West and soaring relationship with its countries. Rather, it comes from the recognition of the obvious fact that today world’s center of economic activity is shifting eastwards. Enhancing cooperation with India is a part of genuinely ‘Eurasian’ policy of Russia designed to make the whole continent more harmonious and integrated. Nowadays, geopolitical and economic competition among states is growing, but international relations are free from harsh ideological divisions of the Cold War period. Thus, the present environment is conducive for countries to exploit every opportunity for truly unbiased pragmatic multi-vector policy. This is especially true for Russia, who is not interested in finding itself ‘squeezed’ between the West and China, trying to find some balance in this asymmetric relationship. Present-day India-Russia relations are developing on a solid basis of previous experience of New Delhi’s pragmatic dealing with the Soviet Union, despite foreign policy disagreements and different ideologies, political and economic systems. Moscow supported New Delhi`s bid to join the Shanghai Cooperation Organization (SCO), to which India became a member in 2017. Russia also welcomes New Delhi`s pursuit of an active role in the SCO’s anti-terrorism efforts.

Russia actively promotes concluding free trade agreements between the Eurasian Economic Union (EEU) and other countries, which is believed to give an additional boost to the integrationist projects, where it holds a very high stake. An agreement with Vietnam came to force in 2016, temporary agreement on free trade with Iran is undergoing ratification process. Same agreements are reported to be signed this year with Serbia and Singapore. At the Eastern Economic Forum 2019 Russian president Vladimir Putin announced the beginning of the first round of negotiations on free trade area between the EEU and India to begin soon. Conclusion of the agreement is likely to spur economic growth in all countries concerned in near term perspective. India on its part is also interested in Central Asian markets and energy resources of those states.

The issue of the transport connectivity between Russia and India is of rising significance. There is a strong need to reinvigorate the plans of development of the International North-South Transport Corridor. At the same time, the agreement to restore a Vladivostok – Chennai sea route that was signed at the EEF will improve India`s access to the markets of North Asia.

A necessity to develop Far Eastern regions of Russia makes it search for new partners in Asia. Russia invites more Indian businesses to invest in its Far East. The first investments that came from India were intended to develop diamond carving and polishing factories in Vladivostok, where reportedly Indian employees already work.

Russia very rapidly rose in the World Bank’s Ease of Doing Business Ranking to 31st position out of 190 countries. It ‘has created a competitive investment space in its Far East, with 18 advanced special economic zones with one of the lowest tax rates in the Asia-Pacific region.’ Russia’s Far East Investment and Export Agency provides assistance to foreign investors.

Russia highly appreciates the pledge of Prime Minister Narendra Modi that he made at EEF to provide 1bln USD credit line to help develop Russian Far East. It seems to be a clear sign of India’s interest in the region.

For quite a long time Russia enjoyed a privileged position on India`s arms market. It is hardly a huge exaggeration to say that India`s purchases of armaments from Russia were the main issue of strategic partnership. Today, India’s arms market is more competitive, and New Delhi is interested in localization of production and technology transfer as part of ‘Make in India’ initiative. Russia announced that it would provide components for its T-90 MS tanks to be assembled in India. Russian Kalashnikov rifles will be produced there as well. Moscow also is interested in cooperation with India in submarine production.

Russia and India concluded the contract for the supply of the S-400 Long Range Surface to Air Missile System, despite the pressure from the United States. The two countries announced at the EEF that they would carry out settlements in national currencies when concluding arms supply transactions.

As for military cooperation, India and Russia regularly conduct joint INDRA exercises, the first exercise of this kind took place in 2003. This year, for the first time the contest of international reconnaissance army teams was held in India as a part of annual International Army Games.

As in 2018, Indian investments in the Russian economy amounted to more than 8 bln dollars and were concentrated primarily in oil and gas and pharmaceutical industries. However, Indian companies are exploring other economic niches. Tata Power Co. Ltd. signed an agreement on financing the development of Krutogorovsky coalfield in Kamchatka. Welspun Group, a leading producer of home textiles, is also interested in the Russian market. Those are just a few recent examples.

As for Russia, it is very much interested in developing cooperation with India whose economy – world’s third-largest in purchasing parity terms - is facing a period of unprecedented opportunity and predicted annual growth exceeding 7 percent for the next several years. It will require energy for its development. In 2018, Russia’s Gazprom started to sell LNG to India as a part under a long term deal at a very competitive for local market price. At the EEF, Russian Novatek and Indian Petronet LNG signed a memorandum of understanding. Rosatom plans to develop cooperation with India to implement new nuclear plant projects; the corresponding agreement was signed with the Indian side in 2018.

The most interesting areas for future cooperation can be high technologies and infrastructure development. According to Andrey Terebenin, Head of Asian Venture Capital Fund AFK Sistema, Managing Partner of Sistema Asia Fund, who has an experience of making business in India, this country is a gold mine for Russian investors. The latter can suffer a kind of discrimination if they choose to work in Europe, where local companies are very cautious when dealing with Russians because of already existing or expected sanctions. This is not the case in India. However, Russian business people face a challenge of adaptation to a local business culture that has its peculiar features.

India-Russia cooperation has the potential for growth. The political will of governments of both countries, prospects of their economic development, mutual interest of business circles will facilitate its development despite current problems and challenges. Broadening people-to-people contacts, improving knowledge of both societies about each other is very important as well if India-Russia special and privileged partnership is to live up to the expectations of its architects.

References: [1] Declaration on Strategic Partnership between the Republic of India and the Russian Federation. URL:\\ https://mea.gov.in/Images/pdf/DeclerationStrategicPartnership.pdf
[2] Joint Statement: Celebrating a Decade of the India – Russian Federation Strategic Partnership and Looking Ahead. URL:\\ https://mea.gov.in/bilateral-documents.htm?dtl/5118/Joint+Statement+Celebrating+a+Decade+of+the+India+Russian+Federation+Strategic+Partnership+and+Looking+Ahead [3] Oreshkin: Soglasheniyemezhdy EAES I Indieymozhetbyt` podpisano v 2019-2020 godahURL:\\ https://tass.ru/ekonomika/5834298
[4] Mumbai Hosts Eastern Economic Forum Field Session URL:\\ https://forumvostok.ru/en/news/v-mumbai-proshla-vyezdnaja-sessija-vostochnogo-ekonomicheskogo-foruma/
[5] Assistance to investors in the implementation of the projects in Russian Far East URL:\\ https://www.investvostok.ru/en/
[6] India-Russia Joint Statement during Visit of President of Russia to India. (October 05, 2018) URL:\\ https://mea.gov.in/bilateral-documents.htm?dtl/30469/IndiaRussia_Joint_Statement_during_visit_of_President_of_Russia_to_India_October_05_2018 [7] Chereshnev M. Ekspansiyana sever: kakIndiyazavoyovyvayetRossiyuURL:\\ https://www.forbes.ru/biznes/374323-ekspansiya-na-sever-kak-indiya-zavoevyvaet-rossiyu
[8] The World Bank in India. Overview URL:\\ https://www.worldbank.org/en/country/india/overview
[9] URL:// https://www.reuters.com/article/us-novatek-india/russias-novatek-wants-to-sell-lng-from-arctic-lng-2-to-india-idUSKCN1V20UT
[10] https://www.rosatom.ru/en/press-centre/news/russia-and-india-ink-cooperation-pact-to-implement-new-nuclear-projects-/
[11] Terebenin A. Indiya – zolotayazhiladliarossiyskihinvestorovURL:\\ https://snob.ru/profile/32155/blog/157452/


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