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Russia-India: about 20 agreements worth more than 20 tens of billions of dollars signed - EastRussia |






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Russia-India: Reboot

At the Russian-Indian summit held in New Delhi, there were signed the order of 20 agreements worth several tens of billions of dollars

Russia-India: Reboot

The first annual meeting between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin ended on a positive note, a statement that signals a significant rise in economic relations between countries in the next decade after several years of relative stagnation.

The first Russian-Indian summit took place against the background of the growing cooling of relations between Russia and the West due to the crisis in Ukraine, and the transactions concluded between India and Russia worth tens of billions of dollars predictably aroused surprise. In essence, the meeting between Modi and Putin stressed that India and Russia are ready to move away from the cliches of “time-tested”, “special” and “privileged” relations and bring more economic substance and strategic weight into them in the context of rapidly changing geopolitical realities. The success of the revitalization of Russian-Indian relations depends on the specific actions on the order of the 20 agreements concluded between the countries. But now 5 can draw key conclusions from the results of the last summit in New Delhi.

First of all helicopters

Russia will continue to be India’s key defense partner, despite the fact that New Delhi is expanding imports of military goods from other countries, including from the main geopolitical opponent of Russia - the United States. In a statement to the press after talks with the Russian president, Mr. Modi stressed that "even if the number of opportunities for India has increased, Russia remains for us the most important partner in the field of defense." Mr. Modi’s assurances about the central role of Moscow in providing India with modern weapons should sound like music for the ears of the Russian leader, who is becoming increasingly isolated from the Western world because of the policy towards Ukraine. To date, Russia's share in the import of military goods to India is 60 percent.

This categorical assurance from New Delhi looks especially significant on the background of the forthcoming visit of US President Barack Obama as the main guest at the celebrations dedicated to the Republic Day. One of the main results of the visit of the US president should be the transformation of the defensive cooperation of India and America. Like Russia, the States are playing a joint production and joint development card in order to strengthen their influence in the fast-growing Indian market, which was liberalized by the permission of Modi to raise the share of foreign direct investment to 49 percent. However, Modi promised the Russian president that it was Russia that would continue to dominate the Indian market, thereby trying to reassure part of the diplomatic establishment of Moscow, which is trying to find a hidden smear in developing relations between India and the United States. The implementation of a key Russian proposal - to make light helicopters in India - will not only help the Makey project "Make in India", but will also strengthen Russia's position in the Indian military goods market.

Speedy "peaceful atom"

Russia will also remain India’s main partner in the field of non-military atomic energy. In this regard, a separate agreement regarding nuclear energy and offering a "road map" of sequential construction of nuclear reactors on Russian projects in India over the next ten years looks particularly important. In addition to the two reactors in Kudankulam in the state of Tamil Nadu and four planned for construction there, India promised to choose an area in which another cluster of six atomic reactors would be built. This will bring the number of reactors built in accordance with Russian projects to 12. In the long term, it is possible to design eight more reactors, which guarantees Russia the superiority in the Indian market of atomic energy. Currently, the project is estimated for the Russian nuclear industry and the state monopoly Rosatom at least in 30-40 billion dollars. Another important aspect of the revised “roadmap” is that Russia will receive part of the reactor components from Indian companies.

The speed with which India and Russia plan to implement this project will inevitably cause concern in the American camp because the United States, which played a key role in the global restoration of nuclear power in India, must agree on its own project. In many respects, this situation persists because of fears about the civil liability regime for nuclear energy, which seems to be the most burdensome and repulsive for the largest US nuclear companies. In these circumstances, all views will be chained to the meeting between Modi and Obama in January 2015. It is expected that it will create a concrete realistic program of cooperation between the United States and India in the field of nuclear energy.

Energy splash

In the relationship between India and Russia, a surge of energy will happen. The importance of cooperation in the field of hydrocarbons and the zeal with which Russia offers exploitation of its gas and oil fields to Indian companies are equally great. India has demonstrated its confidence in this area by sending the head of the oil and gas ministry, Dharmendru Pradan, to meet President Putin at the airport. The parties signed an ambitious cooperation program under the Intergovernmental Agreement on the Expansion of Cooperation in the Oil and Gas Sphere in the 2015-16 years, which consists of many projects, including joint exploration and production of hydrocarbons, long-term supplies of liquefied natural gas and joint study of the pipeline system connecting Russia with India. The agreement between TATA Power and the Russian Direct Investment Fund, which reinforces investment opportunities in exploration, also points to an increased focus on energy cooperation in Indian-Russian relations.

Restart economic ties

Economic relations between India and Russia can be set in motion if procedural barriers are removed, and agreements concluded during Putin’s visit will be operationalized. The parties raised the bar and set an ambitious goal to achieve a reciprocal trade turnover of 30 billion dollars by the year 2025. Ten years will be enough not only to achieve this goal, but also to exceed it. Compared to other countries, 30 billion dollars is a modest goal. By 2025, the trade turnover between India and China could reach 150-200 billion dollars. The United States has set a goal to quadruple trade with India, to 500 billion dollars.

The current volume of trade between India and Russia is 10 billion dollars. In this context, the formation of special investment funds can become a factor that will change the situation. The creation of an investment fund worth 1 billion dollars of joint venture capital through the partnership agreement IDFC (Financial Corporation for Infrastructure Development) and the Russian Direct Investment Fund, as well as the direct investments in high-tech projects worth 2 billion dollars (the capital of Rusnano and Indian investors) means that both the parties are interested in serious cooperation. Prospects for direct diamond trade, a billion-dollar deal between VTB and the ESSAR Group, as well as the agreement between AKRON and NMDC to buy part of the potash mines in Russia, are among the important factors that will revitalize economic ties. Promotion of Russian investments in large infrastructure projects, such as DMIC (Delhi Mumbai Industrial Corridor), as well as in other major sectors of the economy - telecommunications, energy and road construction, fits perfectly into the project "Make in India". Russia, in turn, agreed to encourage India's participation in such sectors as pharmaceuticals, fertilizers, coal mining and energy as a whole.

In addition, the beginning of negotiations between India and the Eurasian Economic Commission on the achievement of full-fledged economic cooperation can become a factor in increasing the effectiveness of economic interaction.

Work globally

One of the important but less discussed consequences of the Russian-Indian summit was the reaffirmed intention of the parties "to work together to achieve a multipolar and democratic world order based on the common interests of all countries." It may sound cliched, but if you think about the subtext, it becomes clear that, despite all the talk that India is drifting to the US camp, the country will retain its strategic autonomy and will work closely on a range of regional and global issues, including the world Terrorism, Afghanistan and the spread of nuclear energy. It is also important that President Putin repeated his words about Russia's support for India's admission to the UN Security Council as a permanent member, about India's participation in multilateral organizations of countries exporting nuclear energy, including the Nuclear Suppliers Group. Thus, Moscow will remain crucially important for many of India's long-sought strategic goals.

The way is ahead

In the long term, the Putin-Modi summit created a detailed model for the transformation of Russian-Indian relations, which slowly moved towards stagnation and fell into the trap of predictable diplomatic clichés. The agreements signed during the summit, especially the economic and energy ones, have great potential if they are implemented on time. However, the ultimate success of the restart of Russian-Indian relations will generally depend on trust in strategic issues.

The latest events - the signing of a military agreement between Russia and Pakistan and the expanding economic and military cooperation between Russia and China - did not arouse enthusiasm in India. In addition, the Russian establishment is still inclined to see India as a future ally of the United States. In diplomacy, perception plays a role. Having laid the foundation for relations with an ambitious doctrine and an updated model of the Druzhba-Dosti concept, it is very important to revive and maintain the trust that will be cement in the new building of Russian-Indian relations.