The Hindu Business Line : Beyond defence

The forthcoming visit of the Russian Prime Minister, Mr Viktor Zhukov, is important as it marks the launch of an initiative to take India-Russia economic ties to a higher level. Specifically, Mr Zhukov, who will be accompanied by a large business delegation, will be launching the “Year of Russia” in India, the objective of which is not merely to familiarise Indian businessmen with investment prospects in Russia but also drive home the message that bilateral eco nomic ties are shackled no longer.

The strong foundation for the ties were laid in the 1970s, when the Soviet Union was still in existence. Ironically, many of today’s problems have their roots in the earlier relationship, that was governed by Cold War imperatives. The Indian debt on account of the erstwhile rupee-rouble trade is one such irritant which, however, has been apparently removed, with Moscow recently agreeing to utilise the fund (of around Rs 8,000 crore) for the benefit of bilateral trade. Among other things, a part of the fund is likely to be used for Russian investment in the multi-role transport aircraft project, an accord on which was signed during the November summit in Moscow between Dr Manmohan Singh and President Vladimir Putin. However, even with the rupee-rouble debt out of the way, the past is still casting a long shadow on India-Russia economic relations, with Defence ties predominating. The ongoing problem with the refitting of the aircraft carrier Admiral Gorschkov is a case in point. A much larger associated problem has been the poor state of the bilateral economic exchange outside of the Defence sphere, one that will challenge the ingenuity of both New Delhi and Moscow. The scale of the effort required can be judged by the fact that, as Dr Manmohan Singh put it some time ago, not only was the trade exchange in traditional spheres such as tea, tobacco, textiles and leather languishing, special efforts to forge new lines of business in applied technology, information technology and telecommunication products, auto components, and gems and jewellery, have not made much headway either.

It is against this background that the “Year of Russia” in India campaign should be seen, next year being the “Year of India” in Russia. As was recently acknowledged by Moscow’s envoy to New Delhi, while the Russian business community as yet “does not know much about today’s India”, Indian business too is “not much aware of the changed scenario in Russia”. Clearly, with this as the ground reality, it will be an uphill task to attain the bilateral trade target of $10 billion in 2010 from around $4 billion now, which underscores the potential which the oil and gas sector, for instance, has in increasing bilateral co-operation in the next couple of decades.

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