The Hindu Business Line : Russian overture

THE "SPECIAL RELATIONSHIP" between India and Russia is based wholly on the ties that blossomed during the Cold War, when the Kremlin responded to New Delhi's overtures to further its larger geo-political interests. That setting has changed today, but the psychological burden (particularly on the Russian side) remains, preventing the conversion of ties to one based on the usual parameters of economic competition and comparative advantage.

Take, for example, Defence cooperation. It grew out of Cold War imperatives, and it is this past which holds the key to the current problem of "protecting" Russian technology in the manufacture of critical Defence items. In a sense, it also measures the steady development of India's manufacturing base and expertise to a point where joint production of Defence items is seen to be more efficient from the Indian point of view than the earlier system of importing equipment wholesale. In fact, the past few years have seen growing tension between the two countries on the issue of transfer of Defence technology, which is why the signing of an intellectual property rights agreement on military hardware secrets during the Prime Minister's visit to Moscow should be seen as a critical enabling provision for closer cooperation.

The Defence relationship will be at the core of the "strategic partnership" between the two countries mainly because of the high dependence of Indian military hardware on Russian designs and spares. The future of the other spur of the special relationship — civil nuclear energy cooperation — is not all that secure for in recent years Moscow has become far more mindful of abiding by the rules set by the Nuclear Suppliers' Group. During Dr Manmohan Singh's visit, the Russian President, Mr Vladimir Putin, openly toed the US line on separation of military and civilian facilities of the Indian nuclear programme. The issue is important for India not only because of the plans to set up more nuclear power reactors with Russian help but also to keep open the fuel supply lines for Tarapur — an issue that has somewhat soured India-Russia relations.

But however, it is in healthier trade ties that the future of the India-Russia special relationship lies, a sphere where progress has been "anomalous", to quote Dr Manmohan Singh while referring to the current annual trade turnover of $1.9 billion. As he pointed out, not only was the trade exchange in traditional spheres such as tea, tobacco, textiles and leather vegetating, if not declining, concerted efforts had not been made to expand India's exports of applied technology, IT and telecommunication products, auto components, or gems and jewellery. While all this cannot happen overnight, Moscow enjoys a big advantage with an investible corpus of Rs 13,000 crore (the funds generated by the erstwhile rupee-rouble trade arrangement) which Russian companies wanting to establish a trading presence in India can readily use. Briefly, not everything is hunky-dory between the two countries. As the continuing differences over the issue of "geographical indications" and the lack of adequate visas for businessmen suggest, New Delhi cannot lower its guard against Russia while bargaining for the best economic deal.

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