NEW DELHI: Prime Minister Narendra Modi is expected to release an ambitious joint vision document with President Vladimir Putin, during his visit to St. Petersburg on June 12, to tap unrealised potential in India Russia economic partnership over the next few decades.
Officials said the vision document will outline plans for Indo Russian economic cooperation in the coming decades. The areas under focus, they said, include Indian pharmaceutical plants in Russia, long term leasing of agricultural land in Russia's Far East, export of automobile components from India and entry of new Indian textile players in Russia.
The list also includes heavy engineering under the Make in India initiative, investments by leading Indian IT firms in Russian tech parks, entering infrastructure market in Russia, collaboration in mining and metallurgy sector, and joint collaboration in the Arctic sector.
India and Russia have in the past few years decided to expand bilateral ties beyond defence. In 2014, Modi and President Putin set a target of $30 billion bilateral trade by 2025. Bilateral trade in 2015 amounted to just $7.83 billion, with Indian exports amounting to $2.26 billion while imports from Russia were worth $5.57 billion.
Pharmaceuticals are among the major export items from India to Russia. India's share is a mere 2% of the total Russian imports, though, and is mainly in generics. This sector has been affected in the past few years due to Russia's policy to promote indigenisation and import substitution. The fall in pharmaceutical exports from India to Russia has significantly affected India's total exports to Russia, according to one of the persons cited earlier.
Indian pharmaceutical companies are looking at the possibility of setting up plants in Russia with some local production to avoid a further fall in exports, people familiar with the matter said.
Agriculture and food processing sector is one of the emerging areas of cooperation. There is considerable demand for import of agricultural products, mainly fresh vegetables and fruits from India. One of the reasons for the inability of Indian exporters to cater to this demand is the logistics. "The solution to this problem could be direct long term contracts between major supermarket chains in Russia and major exporters from India who can deliver on time, quality of packaging and veterinary/phytosanitary standards," an official said.
According to the official, there is also an emerging opportunity in terms of long term lease of agriculture land in Russia's Far East region. China and South Korea are looking at such opportunities in that region, which is being offered to interested partners on long term lease, he said. Russia has announced visa free travel for Indians in its Far East to counter balance growing Chinese presence there.
Automobile components are one of the main strengths of Indian industry. But Indian automobile components account for only a small percentage of total imports of automobile components into Russia. Owing to Russia's differences with the West over the Ukraine issue, however, the demand for automobile components, which earlier used to come from Europe, has gone up. Two major automobile manufacturers GAZ and VAZ are looking for possible sourcing of components from India, an industry expert said.
Textiles and garments constitute yet another important sector for Indian exports to Russia. However, the share of Indian textile and ready made garment exports has steadily gone down in the past few years due to competition from other countries. Efforts are now being made to focus on branding, specific segments of textile market and ready made garments, and local tie ups to regain market share.
Heavy engineering is another promising area for mutually beneficial cooperation, not only in terms of trade but also for joint ventures and technology transfer under the Make in India initiative. Russia is looking for collaboration with Indian companies for developing IT parks for software development and is ready to provide facilities to Indian companies interested in creating their IT base in Russia. The IT parks in Tatarastan, St. Petersburg and Moscow are potential places for Indian investment, according to an official familiar with the sector. There is also interest in areas such as microchip development, secure software and applications and development of modules to protect against cyber threats, he said.
Meanwhile, due to differences with the West, Russia is looking for other partners to develop major infrastructure projects. While Chinese companies have filled up the vacuum, there are considerable opportunities for Indian companies. Indian companies are also looking at the possibility of collaboration with Russian companies for major infrastructure projects such as Smart City projects and transport corridors. Mining and metallurgy is one of the strengths of Russia and India can benefit from Russian technology and know how in this field. There is a long history of collaboration with the erstwhile USSR in this field.
Hydrocarbons is an active area for exploring cooperation between the two countries. In the second and third quarter of 2016, Indian companies invested nearly $5.5 billion in Russia's oil and gas sector. The two sides are working on building an 'energy bridge' between the two countries, based on robust civil nuclear cooperation, LNG sourcing, partnership in oil and gas sector, and engagement in renewable energy sources.
LIKE/SHARE/COMMENT
Comments
Post a Comment