A trade deficit

It is remarkable how two countries with a broad convergence of views on matters strategic have not been able to translate the resultant trust into deeper economic cooperation, as India and Russia have demonstrated consistently over the years. Russia has accounted for over three-fourths of India’s Defence hardware imports during the last ten years. Moreover, its partnership with India extends beyond mere arms supply to advanced technical cooperation and joint production – whether it is the BrahMos missile system, development of a ‘fifth generation’ stealth jet fighter, and licensed manufacture of Sukhoi Su-30MKI aircraft and T-30 tanks, or the building of the Kudankulam nuclear power project. But outside of these strategic areas, there is hardly any economic engagement at a ‘civilian’ level. Bilateral trade between the two countries, at $6.5 billion in 2011-12, was just 0.8 per cent of India’s total merchandise exports and imports. The only significant export item from India to Russia, pharmaceuticals, fetches hardly $700 million. The one commodity where Russia is actually India’s biggest supplier — and is also crucial to the country’s food security — is potash. India imports about $1 billion worth of potash from Russia, which is more than even oil or gas.

Seen in this context, the Russian President, Vladimir Putin’s recent visit to India did not really break fresh ground in increasing the civilian component of economic ties between the two nations. Instead, the rather brief Christmas-eve trip mainly saw Russia seal some $3 billion of weapons sales. True, a $2 billion joint fund between the State Bank of India and a private equity arm of the Russian Government has been proposedfor investing in potential bilateral projects. But apart from that, there were just a couple of pilot-scale satellite communications and scientific research cooperation agreements, along with small-ticket IT and pharma joint ventures, announced during Putin’s visit. On the other hand, no breakthrough was reached on restoring the mobile licenses of the Russian telecom major Sistema’s Indian operations, or grant of tax breaks for ONGC Videsh’s investments in Western Siberian oil fields through its subsidiary, Imperial Energy. The fact both represent significant ‘civilian’ investments didn’t seem to have weighed enough for New Delhi and Moscow to put everything into finding much-needed yet workable solutions.

Indo-Russia relations, in that sense, are a contrast to that with the US, which is grounded much more in civilian and people-to-people interactions. It is these engagements ‘from below’ – whether through IT or the Indian diaspora in US — that have, in turn, under girded a partnership now extending to the ‘strategic’ spheres: The signing of the Indo-US nuclear deal and joint annual military exercises are only a result of all that. India’s ties with Russia similarly cannot be limited to aircraft carriers or nuclear submarines. For it to endure, there has to be more of pharma, fertilisers, oil and gas, IT, higher education, films and other forms of commerce involving a wider mass of stakeholders.

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