India and Russia will set up a joint study group to examine the feasibility of a free trade agreement for boosting bilateral trade and investment flow.

The two countries have also decided to hold formal discussions on the possibility of launching the production of Russia’s Sukhoi SuperJet 100 and ÌS-21 aircraft in India.

The proposed free trade pact, formally called a Comprehensive Economic Cooperation Agreement, is to be signed between India and the Customs Union of Russia, Kazakhstan and Belarus.

Priority projects

The decisions were taken in a meeting between Commerce and Industry Minister Anand Sharma and visiting Russian Deputy Prime Minister Dmitry Rogozin on Wednesday. India had been pushing for a study group for some time as an FTA with Russia could help reduce the country’s economic dependence on the US and the EU.

Russia was, however, earlier insisting that a road map of priority investment projects be drawn up first. India did not agree to the condition on the ground that investment projects were business decisions and not controlled by the Government in India.

“It is encouraging that Russia finally agreed to drop its pre-condition for setting up of the JSG,” a Commerce Ministry official said.

India, on its part, has agreed to formally discuss Russia’s interest in joint production of its civilian aircraft in India either in the working group on trade and economic cooperation or sub-group on civil aviation.

Both sides also reviewed the progress of identified ‘priority projects’.

These projects include establishment of joint stock Indo- Russian enterprises for manufacturing light helicopters, plant construction for manufacturing butyl rubber with capacity of 1 lakh tonne per year at the production site in Jamnagar.

“Seeking to further strengthen the special and privileged strategic partnership and specifically to enhance the economic and investment cooperation between India and Russia on a bilateral basis, we have identified investment projects and proposals for special attention,” Sharma said.

Trade numbers

India’s trade with Russia in 2012 was $6.9 billion which was 14 per cent higher than $6 billion in 2011.