The Hindu Business Line : Engaging Russia

Since the recent New Delhi-Moscow accord on the setting of a task force to `monitor the implementation' of the Joint Study Group — set up in 2006 to examine the problems facing bilateral trade and indicate future prospects and potential — is part of the process of strengthening economic relations between the two, it need not be given special importance as breaking new ground. Yet, the move does indicate that the two sides are looking ahead and, ostensibly, trying to do everything to put bilateral trade ties on a sustained growth path. This is welcome given, one, the nature of the problems facing bilateral trade and, two, the overall strategic relationship envisioned for the two countries.

The declared objective is to attain a bilateral trade turnover of around $10 billion by 2010 which (as the Russian President, Mr Vladimir Putin, himself emphasised) is a modest level given the size of the two economies, but could be a Herculean task considering the actual performance over the past seven years. Thus, while the total trade between the two countries has grown from just $1.33 billion in 2001-02 to 2.76 billion in 2005-06, representing a growth of slightly more than 100 per cent, in the next three years this is expected to risea whopping 260 per cent. This can be attained only if there is a dramatic change in bilateral trade, with new vistas of exchange opening up. The Joint Study Group report is expected to indicate the new avenues that will make such a transformation possible. This is not all, for if India is to gain from the expanded exchange it will have to work even harder to increase its exports, which have been declining the past few years (they have fallen to $733 million in 2005-06 from $798 million in 2001-02, touching a nadir of $631 million in 2004-05). Indeed, since 2003-04, India has been suffering from an adverse trade balance, the negative figure having climbed from $245.8 billion in that year to $1.29 billion in 2005-06.

The scope for expansion of bilateral trade is immense (exports to Russia accounted for just 0.71 per cent of total Indian exports in 2005-06, having declined from 1.82 per cent in 2001-02), but it is also clear that if the economic relationship with Moscow is to be lifted to a new plane, investment ties in the shape of joint ventures (in oil, for example) and a greater exchange in such sectors as information technology and diamonds will have to be forged; this will flesh out the strategic relationship between the two countries. Cooperation in the civil nuclear sector as also in that of Defence supplies holds out much promise which, it is expected, the task force will oversee with despatch.

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