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Indo-Russian Ties – The Unrealized Potential

December 21, 2010

Russian Prime Minister Vladimir Putin visited India in the first quarter of 2010, President Dmitri Medvedev has arrived on a two day visit in India at the fag end of this year. The Russian president has arrived with a few well defined agenda. The most obvious priority for Medvedev is the agreement on nuclear energy. It appears that Russians have inked deals for more than one reactor and in that this has been a resounding success from the Russian point of view. Indian investment in Central Asian oil and gas namely the Sakhalin I and III basins has seen the Indian side satisfied with the progress. India and Russia after developing a hugely successful BraMos missile system are now looking for further cooperation in developing a fifth generation fighter aircraft which will be on the lines of the American F-22 Raptor. Further, we are also developing nuclear submarines together apart from one that Russians will lease to India for ten years. The aircraft carrier Admiral Groshkov should be India bound by 2012 and inducted into Indian navy as INS Vikramaditya.

Dmitri Medvedev and Manmohan Singh

The Russian president has also reiterated in unequivocal terms that they support Indian candidature in the expanded Security Council and in the NSG and any other non-proliferation international bodies that may be relevant. Both nations have exchanged notes on developments in Afghanistan and reiterated that fight against terror is without any conditions. President Medvedev has also aired his displeasure saying that no country should give shelter to terrorists and that the perpetrators of the 26/11 attacks must be brought to book. As a symbol of solidarity with India Russian president will stay at the Taj during his one day Mumbai halt where he will meet the families of those who were killed in the barbaric attacks.

During his Mumbai halt President Medvedev will meet business leaders. There have been some seven agreements inked. Both nations have agreed on increasing trade between the two nations to $20 billion by 2015. On the face of it all this may seem like the Indo-Russian relations are as good as they ever were. However, we must not forget that Russia has been a traditional friend of India. Russian ambassador Alexander Kadakin, who speaks fluent Hindi and Urdu has called the two countries sisters. Russians have also reiterated that as a matter of policy they do not sell arms to Pakistan as that will be a threat to India. No other nation has gone thus far and even the French and the Americans have sold arms to Islamabad ignoring Indian concerns.

On the trade front, Indian companies in the field of information technology and pharmaceuticals are making forays into the Russian markets. While all these developments are welcome, it must be said that Indo-Russian ties can go a lot further and should benefit both nations in ways that should give economic, political and strategic stability to each other.

Russia and India are both emerging economies. They are a part of the BRIC nations that are the catalyst to global economic recovery. Russian economy is also growing at nearly 8% per annum in these times of recession. This is a far cry from the early 90’s when after the collapse of the Soviet Union the Russian federation was in a state of disarray and their economy had all but disintegrated. The natural entrepreneurial skills of the Russians coupled with their traditional forte of oil and gas and defense production saw the Russians back on their feet. Their fundamental strength in the field of science and technology also helped the Russians piece together a faltering nation. There are questions being raised about the strength of their nascent democracy, but I hope they will have the fortitude to overcome these roadblocks and establish a truly democratic nation on the principles of justice and freedom.

India is leaning more and more towards her new found friends and allies in the west. While such alliance and economic and strategic partnership are welcome India would be myopic were we to let go an opportunity that a rising Russia presents us. Being traditional friends’ cooperation between India and Russia should come naturally to both nations. India Inc would love to invest in Russia in a variety of fields. India should insist that Indian retail industry be given open access to Russian markets. Some of the recent retail brands are expanding within India at a furious pace. They could easily expand in the growing Russian market. This will also help India export fruits and vegetables to Russia which are available in India round the year. Mangoes, pineapples, papayas, guavas and lichis could find their way into Russian markets as also vegetables like brinjals, okra, beans and beet root. These are in short supply especially during the long Russian winters. These will be affordable for the average Russian family, coming from India.

While pharma industry has made a beginning, I cannot but wonder as to why Indian healthcare industry cannot make forays into Russia. Some of the established Indian medical brands could share their expertise with their Russian counterparts. This could generate jobs within Russia and cold be a prudent investment decision from the Indian perspective as well as ensure affordable healthcare to average Russian.

While western, Japanese and Korean brands are making headway globally in the automobile sector, the one Indian brand Tata Motors should be given precedence. Again Indian polity should pursue the case of Indian corporate unabashedly.

Indian hospitality industry has also come of age. It would be good to have Indian hotels opening shop in downtown Moscow, St. Petersburg and other Russian cities. And this is not only about luxury hotels but also budget hotels that have spawned in India and could find a foothold in Russia given the expanding Russian economy that will need more accommodation for guests converging from all over the world.

Indian gems and jewelry are famous the world over. Retail space in prime locations in Russian cities could help this sector grow for mutual benefit.

Indian apparel and woolens could be another area where Indian companies could export for affordable consumption. Indian leather is already doing rounds in Russia but we could further increase our footprint in this vital emerging market.

Indian handicraft and carpets could find market in the ever growing appetite of the expanding Russian middle class.

Some of the Indian basic industries like metal and cement could find a niche in the Russian market. The demand for basic industries is only going to grow in the years to come as Russia expands exponentially. There is a proposal of setting up steel plant with a joint venture giving captive mining rights in Karnataka. There is scope for similar ventures within Russia.

It is trade that has been the common thread between nations and cultures. What was true in times past is true today. Russia could help us with our infrastructure development. Russian engineering and science and technology are second to none. Any collaboration in this field will be mutually beneficial.

Education and art and literature are other fields that two nations coming together should not ignore. For serious expansion of trade and commerce exchange of language and culture will be the backbone. Indian corporate must introduce Russian language skills among their employees if they are serious about tapping the growing Russian and Central Asian markets. Depending on government to enhance language skills among Indian population is impractical. India Inc will have to take the lead. For that matter, if India Inc has serious global ambitions they must introduce not only Russian, but also Spanish, French and German apart from English as part of the enhanced managerial skill requirements in their middle and upper echelons. Russia could be the harbinger for India Inc’s global forays. The other potential boom markets in the years to come will be the South American and African markets. Again foreign language skills will be crucial if we are to have serious global ambitions.

When we are talking about Russia we are talking about a time honored friend. We can take some liberties with our Russian friends. Russia could be a useful experience for India Inc on how to crack markets that are emerging and have different requirements. In Putin and Medvedev we have friends who understand our needs and our aspirations as we do theirs. For Indo-Russian ties to really take off we will have to think beyond the traditional defense, oil and gas and space exploration. This is one relationship which is limitless. We need to look at the relationship in a holistic way to be able to do justice to the potential that these two natural allies have.

Lastly, with growing cooperation between Russia and the US it is but natural that Indo-Russian ties take their own place in the pantheon. The new START treaty has ensured that the Russian-American relations are at an even keel. In that both Obama and Madvedev have shown exemplary fortitude. India could be a bridge between our Russian and American friends and the three nations could come together along with European bulwarks like UK, Germany and France to give the world peace and stability that will be crucial for sustained economic progress which will help fight many a global problems in the coming decades.

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