India, Russia to sign economic agreements, discuss rupee-rouble payment mechanism

Amiti Sen New Delhi | Updated on October 04, 2018

Russian President Vladimir Putin waves upon his arrival at the Palam Air Force Station in New Delhi on Thursday   -  PTI

New Delhi’s proposed purchase of S-400 missile system comes under US lens

India and Russia will look to forge stronger economic and strategic partnership through enhanced ties in areas such as energy, digital economy, defence, space technology, start-ups and infrastructure besides discussing the feasibility of a rupee-rouble payment mechanism during Russian President Vladimir Putin’s visit.

The two sides are expected to take forward a proposed multi-billion deal for the S-400 surface-to-air missile system but fresh warning by the US cautioning its allies that transactions with Russia could trigger economic sanctions against the transacting country may complicate matters, a government official said.

“While both the sides will focus on speeding up further the growing trade and investment flows between the two countries, India will make a case for a more balanced growth in trade as the present arrangement is highly tilted in favour of Russia,” the official told BusinessLine.

India-Russia bilateral trade jumped 42 per cent in 2017-18 to touch $10.68 billion compared to $7.48 billion in 2016-17. India’s exports, however, were valued at just over $2 billion while Russia exported goods worth $8.5 billion. Two-way investments have already crossed $30 billion and a fresh target of $50 billion for 2025 could be set. Putin arrived in New Delhi on Thursday evening for the annual India-Russian summit slated for Friday. While the Russian President met Prime Minister Narendra Modi on Thursday evening at his residence, the official meeting between the two leaders, delegation level talks and exchange of agreements will take place on Friday. Putin and Modi will also attend a business summit.

“More than 20 agreements are expected to be signed by the two sides in areas such as energy, space technology, defence, infrastructure and start-ups. The energy deals will be especially crucial with India’s ONGC Videsh expected to sign a pact with Russia’s Gazprom during the summit,” the official told BusinessLine.

Gazprom started supplying Liquified Natural Gas (LNG) to India from June at highly competitive prices as part of a long- term contract. New Delhi is also keen to use the visit to push the idea of putting in place a new rupee-rouble payment mechanism which would allow the two economies to trade in their local currencies.

“Commerce & Industry Minister Suresh Prabhu has already discussed the feasibility of a rupee-rouble payment mechanism to the Russian Ministers of Investment and Trade and Commerce and India will pursue it at the bilateral summit,” the official said.

A mechanism to pay in local currencies will make it easier for both countries to hedge against foreign currency risks, help to by-pass banking sanctions from the US and also make Indian and Russian products more competitive in each other’s markets, the official explained.

Ksenia Kondratieva from Mumbai reports:

Multiple sources in the Russian delegation and diplomatic missions told BusinessLine that just a day before the summit, there were still more uncertainties than clarity on what documents would actually be on the signing list.

“This summit is important for both countries, rather to show each other that the strategic partnership has not lost its actuality, despite the latest geopolitical developments. But if you look at agreements up for signing — most of these are just MoUs with very vague description,” a person close to the developments said.

Meanwhile, two business forums will take place on the sidelines of the summit. One organised by Russia’s Export Center, an institution created to boost exports from Russia, will focus on details of cooperation between Russian and Indian businesses, including identifying perspective niches of cooperation, starting business and securing investments. The forum will see participation of Russia and India trade chambers and business CEOs across finance, transportation, energy and IT industries.

Another business forum which is expected to be addressed by Modi and Putin will take place on Friday. Focused on cooperation in oil and gas energy, digital economy and start-ups, the event will see participation of top ministers as well as CEOs of leading corporates, including Gazprom, Reliance Industries, ONGC, AFK Sistema, Wipro and Tech Mahindra.

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Published on October 04, 2018
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