India and Russia are discussing a free trade agreement (FTA) and are very keen on a “quality increase” in trade cooperation between the two countries, visiting Russian Deputy Prime Minister Denis Manturov said on Monday.

Both sides are also discussing a Bilateral Investment Protection Agreement (BIPA), Manturov, who is also Russian Trade Minister, said at India Russia Business Dialogue 2023, organised by Federation of Indian Chamber of Commerce and Industry (FICCI) in the capital.

“I am sure this kind of mechanism that guarantees protection of investments will be beneficial for both sides,” Manturov said.

External Affairs Minister S Jaishankar said the Covid pandemic had disrupted discussions on an FTA between India and the Russian-led Eurasian Economic Union. 

“I hope our colleagues will pick up on this … because we do believe it will make a real difference to our trade relationship,” Jaishankar added.

Bilateral agreement

Jaishankar also said that negotiations are at an advanced stage for a Bilateral Investment Protection Agreement and expressed confidence this would provide confidence to investors from both sides.

The FTA talks and also a move towards BIPA signals a clear step up in economic relations between the two countries and comes even as the Western countries have been nudging India to distance itself from Russia over its February 2022 invasion of Ukraine.

It also comes when India is currently also engaged in FTA discussions with Britain, the European Union and the Gulf Cooperation Council (GCC)

Meanwhile, Manturov also said that Russia would consider widening the use of “national currencies and currencies of friendly countries”, a remark that could sound music to the ears of Indian side which has been keen on increasing the use of its rupee currency for trade with Russia.

“We would like to widen the use of national currencies and currencies of friendly countries  to minimise risks related to currency settlements”, he said.

India’s bilateral trade with Russia has seen quantum jump over last two years with imports from Russia quadrupling to about $46 billion in 2022-23, largely due to increased oil imports, say economy watchers.

Russian Trade Minister said road construction material and equipment and chemicals and pharmaceutical products were in demand in Russia. “I am sure that this will create opportunities for Indian companies to increase their supplies to Russia”, he said.

Jaishankar stressed the need to motivate businesses from both sides to diversify and expand the basket of goods. Apart from traditional goods of pharmaceuticals and organic chemicals, there are possibilities in auto spare pare parts, electronic components and medical devices, food and agricultural products, he added.

“We are determined to make India a global manufacturing hub. It is clearly our strategy to position ourselves as major manufacturing hub, strong trader and service provider,” Jaishankar said.