- Occasional Papers
- Oct 12 2017
The 70th anniversary of Russia-India relations is an opportune time to make a comprehensive assessment of the current state of their cooperation, keeping in mind the long history of friendship between the two countries. In the last few years, India and Russia have been struggling to retain the legacy of their long-term relationship while moving beyond the traditional spheres of cooperation to reach new heights. To expand their bilateral agenda, it is time for Moscow and New Delhi to identify more promising fields of cooperation and boost their engagement in these.
A cursory look at the last few joint statements of Indian Prime Minister Narendra Modi and Russian President Vladimir Putin may suggest that not only is the bilateral relationship well and healthy, but that it is continually evolving. However, a deeper analysis of these official statements shows that the two sides are facing difficulties in translating their sentiments into reality. Some of the path-breaking initiatives mentioned in these documents are merely repeated in the next, without any further development, let alone a clear roadmap for implementation. Even in the military-technical sphere, which was always the bedrock of the bilateral partnership, the relationship between the two sides seems to be wavering. There have been disagreements between them while new players have been taking Russia’s place in the Indian defence market.
There is growing evidence that the Russia-India relationship needs to be infused with new energy. At present, there are two pillars in their ties– defence and energy. It is important to find new areas that could serve as catalysts for expanded cooperation. This paper pays special attention to the St. Petersburg Declaration issued by the leaders of the two countries in early June this year – a document that takes stock of the recent years of partnership and envisions the prospects of bilateral ties in the 21st century. There is no doubt that official documents do not fully reveal the state of a relationship and sometimes may even be misleading. Even so, this paper analyses the Declaration and compares it with three previous joint statements of Russian and Indian leaders in an attempt to gauge the extent to which the bilateral dialogue has been expanded, if at all, and to define which fields could be future drivers of the relationship. To get a comprehensive view of the bilateral ties, a wide range of spheres—including geopolitics, trade and economy, high-technology cooperation, people-to-people contacts, and scientific ties—will be examined.
An overview of the joint statements of 2014, 2015 and 2016
The primary focus of the joint statement released in New Delhi in 2014 was energy. Modi and Putin agreed to set up new nuclear plants in India and “envisage broader collaboration between hydrocarbon companies of the two countries in oil and gas exploration and production as well as in LNG projects and supplies”.[i] The document issued after the 15th annual summit and titled ‘Druzhba-Dosti: A Vision for Strengthening the Indian-Russian Partnership over the Next Decade’ highlighted a few areas of cooperation. Apart from energy, the emphasis was on technology and innovation, expanded economic engagement, global order and world peace, and people-to-people ties. Since the declaration was devoted to the vision of the two states’ relations till 2025, the leaders agreed to set a concrete target of bilateral trade turnover of goods and services at US$30 billion for the next 10 years.[ii] Remarkably, this was the first time in the post-Cold War period that Moscow and New Delhi touched upon the groundbreaking idea of conducting transactions in their own currencies instead of the US dollar. It remains to be seen, however, how the two states are going to implement this idea. Another important issue regarded as having “substantial opportunities” was the utilisation of information technologies, both at the level of bilateral scientific and technological interaction and between the business communities of the two countries.
The decision was a departure from the past, when discussions on IT were mainly about the need to provide international information security and promote intergovernmental cooperation in this field. This is what was discussed between Putin and then Prime Minister Manmohan Singh in 2013.[iii] Notably, a comprehensive economic cooperation agreement between India and the Eurasian Economic Union was considered. Apart from that, starting in 2014, discussions on a joint exploration for hydrocarbons by Russian and Indian companies in the Arctic region were expanded to include “scientific cooperation to study challenges like melting ice, climate change, marine life and biodiversity”.
The 2015 joint statement[iv] was much longer and covered more points of bilateral agenda development than the previous ones. Areas of cooperation outlined included trade and investment, energy, education, science and technology, culture, tourism and people-to-people contacts, space, defence, security and disaster management, apart from international and regional issues. However, the actual text in the majority of issues covered merely mentioned the “positive developments” in the previous agreements. One of the few exceptions was the energy sphere in which the two states managed to reach an agreement on Indian investments in the hydrocarbon sector of Russia. This track has proved mutually beneficial, with Russia’s Rosneft subsequently acquiring a 49-percent stake in Essar Oil Ltd. Interestingly, the 2015 declaration was the first time that the idea of “developing cooperation between Russian and Indian commercial banks” was explored.[v] This occurred despite one of the largest Indian private sector banks – ICICI Bank – shutting down its office in Russia in December 2014.
Putin and Modi’s summit in Goa in October 2016 was called “triumphant”[vi] due to the signing of a deal for S-400 Triumf air missile systems. However, despite the progress in the defence sector alongside new deals in energy, the joint statement acknowledged that it would be difficult “to realise the target set at the Annual Summit in December 2014, to increase annual bilateral trade and investment”.[vii] It was not the only issue on which the two sides had not moved forward since 2014. The paragraph about the importance of the Arctic region in this declaration, for example, was merely a repeat of what was said in the Joint Statement of 2014.
It is worth noting though that the two countries have continued their partnership in Russia’s northern energy projects. The Goa Declaration mentioned that Moscow “expressed its interest in attracting Indian oil companies to participate in joint projects in the offshore-Arctic fields of the Russian Federation”. In early October 2016, prior to the India-Russia Summit, a consortium of Indian companies, headed by Oil India Ltd (OIL), formalised a 23.9-percent acquisition of Vankorneft, the Rosneft-controlled company managing the huge Vankor oilfield. The deal was followed by OIL taking another 29.9 percent stake in the nearby Taas-Yuryakh oilfield run by the same company.[viii] At the end of October 2016, ONGC Videsh Ltd., the overseas arm of the state-owned Oil and Natural Gas Corporation, completed the acquisition of an additional 11 percent interest in the Vankor oilfield, taking its total stake to 26 percent.[ix] Thus there is a broad field for mutual exploration in the Arctic, but beyond the energy projects, no substantive agreements have been finalised.
Petersberg Declaration 2017: Shared vision and technologies
This document, which, alongside the memorandums of understanding (MoUs) between Russia and India, was one of the major outcomes of the bilateral summit in St. Petersburg, was entitled ‘A Vision for the 21st Century’. It implies that the areas mentioned in the Declaration are not only the main strands of the bilateral ties, but will also be the key drivers of their relationship for many years to come. Apparently, the timing of this joint vision is connected with the anniversary of the relationship, but it comes much after similar ‘shared vision’ documents between India and the US (in 2000), and India and China (in 2008).
Although the India-Russia declarations rarely mention any specific third country, it does appear that their relationship is increasingly dependent on the geopolitical context that has dramatically changed in the last five years.
The geopolitical factor has always been one of the most significant in India-Russia cooperation. “Similar political and strategic perceptions of the world” used to be the defining pillar of the relationship[x]. However, the latest trends show growing divergence in the two countries’ approaches towards various global issues. Even though Moscow and New Delhi are time-tested partners who can rely on each other – a cornerstone of every joint statement made by Russian and Indian leaders – the mutual confidence has been undermined recently. The main reason is the growth of suspicion on both sides – a situation which has been exacerbated by their respective media.
After the Ukraine crisis of 2014, the relationship between Russia and the West entered a stage of political and economic confrontation. The stalemate in Russia-US relations – an issue which has always influenced bilateral ties of Moscow and New Delhi from the time of the Cold War – has compounded the problem.
In 2009 when Russia and the US sought to reset their relations, there was a slight hope that these would improve. However, the bonhomie between the former leaders of the two states – Presidents Dmitry Medvedev and Barack Obama, if ever there was any, did not last long. Very soon the ‘reset’ policy encountered bilateral and global issues with the two unable to agree upon the details of their nuclear arms deals, and their different approaches towards resolving the crises in Libya and Syria. But the events in Ukraine, in end 2013-start of 2014, became the most significant point of rift between Moscow and Washington. Since then their bilateral ties have deteriorated drastically, with the US, EU, Canada, Japan and some other US allies imposing several rounds of sanctions against Russian individuals and companies, and Moscow retaliating with its own blacklists and food embargo.
There was a feeling that given current US President Donald Trump’s stance towards Russia during his campaign, the relationship between Moscow and Washington might improve as he took his seat in November 2016. Policy experts were of the view that the two sides could work out productive cooperation in the field of security, finding common ground in combating terrorism and resolving the Syria crisis on mutually acceptable terms. However, since the beginning of his term, Trump and a number of his team members have faced unprecedented criticism for their Russian connections, while Moscow has been accused of interference in the US elections. The first six months of the Trump presidency have seen a great deal of ambiguity as he has not managed to consolidate power and get support from the Congress as well as the majority of the US population on matters relating to Russia. In August 2017, US-Russia relations saw an even steeper decline as US lawmakers approved the new sanctions package hitting the Russian energy sector. At the same time, diplomatic ties between the states were seriously undermined when Moscow, albeit eight months after Obama’s decision to expel Russian diplomats from the US, retaliated by forcing Washington to reduce its diplomatic staff in Russia.
At the moment, no prospect of resolving the rapidly aggravating US-Russia standoff seems to be visible. It is clear that geopolitical confrontation has increased, with the two states contesting each other in every part of the world. This situation is highly unfavourable for India which is keen on neutral, if not friendly, interactions between the US and Russia. New Delhi is finding it difficult to keep a balance in its cooperation with both states, as support for one is regarded by the other as a step against its interests.
Concerns for Moscow
Russia is obviously displeased with the rapidly growing proximity between India and the US, mainly in the defence and security sector. Moscow viewed with suspicion the intimacy between the Modi government and the administration of Barack Obama that resulted in the signing of the historic Logistics Exchange Memorandum of Agreement (LEMOA) and the recognition of India as America’s ‘major defence partner’.
Narendra Modi and his government have brought paramount changes to India’s traditional foreign policy of non-alignment and non-interference. Even though the Indian position on global issues is sometimes not articulated clearly or presented at all, India’s actions speak louder than words. Due to the active foreign policy of the incumbent government, India now has stakes in almost every global issue. The international weight of the country has been increasing significantly, and it has been aligning itself with different movements. It seems that India successfully participates in the Brazil-Russia-India-China-South Africa (BRICS) grouping, the Shanghai Cooperation Organisation (SCO) and the Russia-India-China (RIC) trilateral, and yet signs several deals worth billions of dollars with US companies and agrees to provide its soil for a US military contingent. However, the modern world also sometimes resembles the Cold War era, and makes it difficult to run with the hare and hunt with the hounds. Russian officialdom is sensitive to the US-India agreements as they target Russian interests in both the military and energy spheres that underpin strong bilateral cooperation between Russia and India. From the geopolitical perspective, the growth of military exercises between US and India (alongside Japan) appears indicative of the foreign policy pattern New Delhi is following. Moscow’s logic is apparently as follows: if India is diversifying its military cooperation partners, why should Russia continue to ‘put all its eggs in the Indian basket’? Even though each state’s red lines are easy to understand, it is getting much more difficult to manage their relations with their friend’s opponents.
Alarming signals for New Delhi
In its turn, the Kremlin has taken several steps that were considered harmful by New Delhi to its interests. Obviously Pakistan is the main source of irritation for the Indian government. The rise of a bilateral partnership between Moscow and Islamabad, especially the joint military exercises conducted by Russian and Pakistani military personnel in September 2016, and the supply of Russian helicopters to Islamabad, were disturbing signals and certainly increased the level of displeasure in New Delhi.
After the Ukraine crisis of 2014, Moscow started to pay much more attention to its eastward foreign policy. As Russian scholars point out, “in the light of the uneasy political and economic situation, Russia was forced to look to Asia, including Pakistan”.[xi] Even so, bilateral cooperation between Russia and Pakistan is at a nascent stage. Apart from the supply of four Mi-35M helicopters mentioned earlier, the two countries signed an agreement in October 2015 to jointly construct a Karachi-Lahore gas pipeline. From the Russian side there has been interest in the energy cooperation with Pakistan, in particular in exploring hydrocarbons resources and supply of liquefied natural gas.[xii]
Another point of Russian interest in Pakistan is apparently connected to the Afghan crisis. President Putin’s special envoy for Afghanistan, Zamir Kabulov, commenting on Donald Trump’s strategy in South Asia said, “Pakistan is the key regional player”, with which countries should negotiate.[xiii] At the Heart of Asia conference in December 2016, Kabulov said: “…we understand India’s concerns, but we can’t win the war on terror without Pakistani support”.[xiv] Thus, combating terrorism in Afghanistan is another track of cooperation between Moscow and Islamabad.
Indian experts believe that Russian cooperation with Pakistan should not be linked to the India-US partnership. In their opinion, it is unfair to make such an inference. Analysts also argue that there is no comparison between India’s military import from Russia and Pakistan’s – whereas India, as one of the largest buyers of Russian military hardware, pays Russia around US$4 billion annually, Pakistan’s stake nears just US$100 million. Is this small monetary benefit worth Russia spoiling its relationship with New Delhi? Although the amount of military equipment supplied to Pakistan is not huge and obviously does not threaten Indian security, the sensitive point is that Russian weapons might be potentially used against India.
Undoubtedly India is still Russia’s major partner in South Asia. In the latest Foreign Policy Concept of the Russian Federation, bilateral relations with India have been called “the historical friendship which is based on shared foreign policy priorities and deep mutual trust”.[xv] However, Russian policy priorities in South Asia, including the objectives of cooperation with Pakistan, are not mentioned in the text. Moscow has yet to work out and articulate a coherent strategy towards the region as a whole and its states. Russia has to avoid any kind of unpredictability in its regional approach so that there is no place for ambiguous assessment.[xvi] At the moment it is clear that Moscow’s decision to develop ties with Islamabad was not an emotional step taken on an ad hoc basis. Obviously it was not intended to hit Indian interests or put at risk Indian security. However, Moscow seems to be diversifying its economic and geopolitical presence in the region, trying to find alternative buyers of its military equipment, in case the trend of losing Indian market share continues.
The China factor
While the Russian “gravitation toward Pakistan”[xvii] is irritating for India, the evolving politico-military cooperation between Moscow and Beijing is a bigger pain from a strategic perspective. Despite being India’s largest trade partner by volume, Beijing is still seen as an opponent which seeks to undermine New Delhi’s positions in South, Southeast Asia and the Indian Ocean region.
In the past, India could rely on Moscow’s support when it faced assertive behaviour from China. In 1959, the USSR criticised China for invading India and Soviet leader Nikita Khrushchev is reported to have personally “blamed Mao Zedong for the border skirmish”.[xviii] Until the very end of the Cold War, the Sino-Soviet relationship remained tense with divergences on a number of issues, from ideological differences and border disputes to China’s relations with Pakistan and the US. The relations between the Soviet Union and China began to normalise in 1986 after the then Soviet leader Mikhail Gorbachev’s famous speech in Vladivostok, which was followed by resolving obstacles in their bilateral ties. Although China was not among Russian foreign policy priorities in the 1990s, relations with Beijing were important in terms of geopolitical interests. This became evident after the North Atlantic Treaty Organisation (NATO) began to expand eastwards.[xix] The fact that China showed considerable understanding of the Russian discomfiture with this expansion became one of the important reasons for Sino-Russian relations improving. It gained vital significance in the context of the Ukraine crisis when Russia’s strategic interests were at stake.
Chinese support in Russia’s confrontation with the West does not mean a strategic convergence of the two states’ interests. Even if Russia and China continue to have similar approaches globally, they will definitely find it difficult to align their policies in their neighbourhood.[xx] Beijing’s assertiveness in the region is a factor in the India-US intensifying partnership, which is eventually aimed at the containment of China. For security reasons India seeks more engagement with Washington and other regional players, such as Japan and Australia. In this respect, unless Russia balances its strategy in Asia, Moscow and New Delhi will continue to move in opposite directions. The Russian position on the Doklam standoff between India and China, and its diplomatic efforts to convince China to include Pakistan-based terrorists groups in the BRICS declaration at Xiamen, are the positive aspects of Moscow balancing its foreign policy.[xxi]
At the economic level, despite rapidly strengthening ties with Beijing, Moscow should remember the lessons of the 1990s when it unilaterally linked itself with the West and eventually found itself in a vulnerable position after the sanctions were introduced. Unless Russian officialdom wants to fall into the same trap again, it should continue its pivot towards Asia that seemingly has already taken place, and follow a multi-pronged Asian policy. This will enable Russia to have a real alternative to turn to, or at least an additional track, apart from its economic connections with Europe. In this light, developing a partnership with India as the leading power in South Asia, as well as building cooperation with Japan, South Korea and the ASEAN countries, is of highest significance for it.
Another one of India’s fears is that Russia may join the China-Pakistan Economic Corridor (CPEC). There is no evidence yet that Moscow will be part of the project, though the Pakistani and Chinese media routinely promote the idea that Russia’s participation would “boost Sino-Russian relations and enhance multinational cooperation”.[xxii] Even so, Beijing and Islamabad’s eagerness, as shown in various media reports, is creating misunderstanding and nervousness in the Indian-Russian relationship.
The Afghanistan crisis
There is also a divergence of views on how to resolve the situation in Afghanistan. The intention to “coordinate positions on challenging issues including achievement of national reconciliation in Afghanistan in the agreed framework of the Moscow dialogue”, as mentioned in the text of the St. Petersburg Declaration, does not sound convincing, and vividly demonstrates that there is still no agreement on this issue between India and Russia. In previous joint statements, security and stability in Afghanistan always had an important place, along with one or two abstracts on the threats posed by terrorism, extremism and illicit drug-trafficking and drug-production, along with commitments to “joint and concerted efforts to address the challenge of terrorism” as well as “the willingness to provide assistance” to Afghanistan’s government.[xxiii]
The Afghanistan crisis is a challenge not only for regional security, but also for the India-Russia relationship. An important factor, and an obstacle to finding a resolution to the crisis, is that it has turned into yet another area of competition between Russia and the US. Two major differences exist between India and Russia on Afghanistan. For one, Moscow would like to see Afghanistan a neutral country, whereas India has been supporting the US presence there, and is likely to adhere to this position in the foreseeable future. The second difference is that Russia favours inclusion of some factions of the Taliban in the intra-Afghan dialogue process as the Taliban controls about 50 percent of the territory and, in Russia’s view, might be helpful in “countering the expansion of ISIS influence in Afghanistan”.
India has already participated in the trilateral consultations with delegations of the US and Afghanistan, and continues to hold talks with Washington on the shared strategy to deal with the crisis. At the same time, New Delhi joined Moscow’s initiative and took part in two rounds of multilateral discussions on the situation in Afghanistan. Thus, India’s role as a crisis mediator is of great importance. Moscow and New Delhi have to definitely intensify discussion of this matter as it would contribute to finding a more balanced solution. Or else, their interests will continue to diverge and their strategies in the region will grow further apart.
The negative trends in the India-Russia political relationship, especially Moscow’s changing policy towards Pakistan, have been widely discussed in the Indian media, and by experts and politicians as well. During the Parliament session in early August this year, opposition members raised the issue of the “decline” in India’s relationship with Russia. They lamented the growing Russia-Pakistan military ties and criticised the “pro-US” course of the Indian government under PM Modi.[xxiv] The good news is that despite the turbulence in their relationship and contrary views on some issues, both the Kremlin and South Block have shown patience and restraint. As the Indian Minister of External Affairs Sushma Swaraj said in the Rajya Sabha, “Both US and Russia are with India” (Read: Russia supports India, not Pakistan) and “the relationship with the US should not be at the expense of Russia”.[xxv] It is indeed time for both sides to demonstrate that their bilateral relationship is built on deep mutual trust. It is important to make well thought out statements and take steps that are carefully weighed.
Economic and trade cooperation
Economic ties between the two countries remain the most challenging aspect of their relationship. To understand the poor state of trade between the two, it is worth noting their positions in each other’s list of trade partners. In 2016, India took 17th place in the list of Russia’s trade partners, while Russia ranked 26th among Indian trade partners by total volume. Overall trade between the two countries in 2016-17 amounted to US$7.48 billion.[xxvi] Indeed, it is evident that their economic cooperation has become stagnant. Trade volumes have been fluctuating between US$7-8 billion since 2011 without showing any signs of dynamism and growth.
Russian exports to India include mineral products, precious metals and stones, machinery, equipment and vehicles, chemical products, wood and wood products. India supplies Russia with chemical products, pharmaceuticals, food products, agricultural raw materials, and textiles.
It is also necessary to take into account bilateral investment. In the last few years there has been an increase in investments from both sides. The acquisition of Essar Oil Ltd for nearly $13 billion by the Rosneft-led consortium in August 2017 was “the largest foreign direct investment (FDI) into the country till date and also the largest outbound investment from Russia”. The deal will hopefully help the Russian company gain access to India’s rising fuel market[xxvii]. India’s investments in the Russian economy amount to over $8 billion and are mainly concentrated in the oil and gas and pharmaceutical sectors.
There are several major obstacles that inhibit economic interaction between India and Russia. The first is logistics. Russian firms are more interested in importing goods from Europe or China since transportation requires just one or two weeks. By contrast, delivery from India by sea or land can take from 40 to 55 days and certainly increases costs. The implementation of the International North-South Transport Corridor will definitely ease the flow of goods and hopefully facilitate trade relations. The creation of a free trade zone under the FTA between India and the Eurasian Economic Union (EEU) could also facilitate trade between Russia and India. The negotiation process is still underway. One of the obvious difficulties is that the conditions of the free trade agreement have to be agreed upon by every member state of the EEU.
Secondly, the Russia-India economic relationship is heavily dependent on collaboration between state-controlled companies. The state is a controlling shareholder in the majority of Russian companies cooperating with Indian partners, such as Rosneft, Novatek, Roscosmos, Rosatom, Rostech, or Schwabe. Government-to-government interaction often leads to bureaucratic delays. There are difficulties in interaction between Russian public sector companies and Indian private companies. Obviously, both sides need to attract private sector companies, including start-ups to the business dialogue, and facilitate conditions for doing business. Finally, there is need to embrace new areas of economic relationship and, perhaps, digitalise the partnership to neutralise the geographical distance between the two countries.
New spheres of interaction
As seen in the St. Petersburg Declaration, at the official level, there is an attempt to infuse energy into the relationship and add new dimensions to the bilateral cooperation. It has been said that advancing comprehensive relations between the two countries is “an absolute priority of the foreign policy of both” and the two “will continue to widen the scope of cooperation by launching large-scale initiatives in different spheres and enhance and enrich their bilateral agenda so as to make it more result-oriented”[xxviii].
Cooperation in the Arctic and the Far East regions
In the St. Petersburg Declaration, the two leaders reiterated their interest in “launching joint projects on exploration and exploitation of hydrocarbons in the Arctic shelf of the Russian Federation”[xxix]. It is evident that a developing collaboration in the Arctic is significant for both sides, but at the moment bilateral cooperation related to this region is at a very nascent stage.
According to the Ministry of External Affairs, India has scientific, environmental, commercial and strategic interests in the Arctic region. In May 2013, India was granted observer status to the Arctic Council[xxx], and Russia was among the countries which supported the Indian bid.
Even though India’s initial interest in the Arctic was in the development of scientific projects, studying flora and fauna as well as climate change issues in the region, in recent years, economic and strategic objectives have come to the forefront. Russia, due to its geographical position, research expertise and member status in the Arctic Council, is a source of interest for Indian companies. For its part, Moscow, facing Western sanctions aimed at its energy sector and adversely affecting project development, is eagerly looking for investments from other countries. India can hardly replace the US and Europe and take on the role of technology provider. Still, Indian energy companies can certainly support Russian partners looking for trusted foreign investors.
The Vankor oilfield is an example of an Indian company cooperating with Russia’s Rosneft. This apart, in March 2017, Gazprom Neft and ONGC Videsh Ltd. signed an MoU expressing an intent to join forces “for implementation of offshore hydrocarbon production projects in Russia and elsewhere in the world” as well as to “exchange best technical, production, and commercial practices regarding field development in the Arctic and on the Sakhalin Island”.[xxxi]
The Northern Sea Route (NSR), which is just about to become an alternative way of delivering oil and gas to European and Asian markets, will definitely facilitate the process of resource development in the Arctic and open up new opportunities for Indian companies. For instance, India’s ONGC Videsh Ltd., taking part in the Sakhalin-1 project, could supply oil to Europe through the NSR. That apart, if Russia decides to, it could supply its share of oil production to Japan, which wants to lower its dependence on imports from West Asia. This scenario would be beneficial for both New Delhi and Tokyo, at least logistically. There is no reason for Russia to turn down such an option.
While environmental, scientific and strategic cooperation between Russia and India in the Arctic region is yet to gain momentum, commercial interaction has been expanding, with Indian companies actively participating in energy projects in Russia’s North and Far East. The investments in the Far East could be of mutual benefit for both countries. The discussions at the Eastern Economic Forum held in September 2017 in Vladivostok showed that New Delhi was eager to participate in the region’s development. However, Russia should create favourable conditions for investors and facilitate the fulfilling of its regulations, while Indian business should be more decisive in embracing new opportunities.
The St. Petersburg Declaration refers to building an “Energy Bridge” between the two countries. Although it remains to be seen how this ambitious initiative will be realised, the Arctic region could well become the bridge for future cooperation between Russia and India, encompassing both economic and political benefits.
Trade in national currencies
Trade between the former USSR and India had one unique feature – it was a trade denominated in Indian rupees, which kept the US dollar and other currencies out of all transactions. Both sides gained from such trade; India, in particular, was able “to source imports without spending foreign exchange”, and at the same time obtain substantial quantities of crude oil and kerosene and defence equipment from the Soviet Union. However, after the collapse of the USSR, the rupee trading system was abandoned. In May 1992, a five-year trade agreement was signed between Russia and India which marked a new phase of convertible currency trade.[xxxii]
Since 2014 the two sides have been talking about their intention to “promote settlements of Indian-Russian trade in national currencies to reduce dependence on other currencies”.[xxxiii] It seems a promising step that might bind the two countries’ trade and economic interaction, although its implementation will probably require some more time. Apparently, there are not enough compelling reasons yet for such a step. Moreover, there are other hurdles. At the moment there is only one Russian retail bank branch operating in India, and not a single Indian retail bank branch in Russia. For the record, there are four Chinese and three Japanese banks on Russian soil. To some extent, this reflects the level of Russia’s business interdependence with these two states. The banks provide credit opportunities for small and medium entrepreneurs, who constitute one of the major drivers of growth in economic cooperation. The local branch of a foreign bank is also a source of reassurance for the diaspora and tourists from that particular country.
Judging by the latest declaration, technological cooperation will play a crucial role in the Indian-Russian relationship of the future, and it is not going to be limited to military-technical cooperation. The document contains references to energy efficient technologies, space technologies, information and communications technologies, supercomputing technologies, nanotechnology, and other emerging technologies and innovation. The high-level committee on High Technology that has been set up should help develop this track. The first meeting of the committee, chaired jointly by Indian Finance Minister Arun Jaitley and Russian Deputy Prime-Minister Dmitriy Rogozin, was held on the sidelines of the TECHNOPROM forum in the city of Novosibirsk in June this year. Although the deliverables of the panel are still awaited, it is considering “creating new generation spacecraft for the Earth’s remote sensing, navigation, communications and researches of the far space” as well as “training Indian astronauts” at the Roscosmos State Corporation for Space Activities in Moscow.[xxxiv]
Another area which has serious prospects for cooperation is information and communications technologies (ICTs). It is necessary to remember that the India-Russia partnership is heavily state dependent and subject to the political will of the two governments. That may be one of the reasons why interaction in this sphere, which has immense potential, remains frozen. Even so, the establishment of a US$200-million IT and Innovation Fund in accordance with the MoU signed on the sidelines of St. Petersburg Forum, might change things..[xxxv] Even though the Fund is not huge, this track could possibly become one of the future drivers of the relationship.
Cooperation in ICTs was not mentioned by the two sides at their Novosibirsk meeting, which suggests there has not been any tangible progress yet. However, ICT seems an area ripe for Russian-Indian partnership. Both countries have leading expertise – Russia has made significant progress in the areas of computer programming, Artificial Intelligence and robotics, whereas India possesses a worldclass software industry as well as a large highly-skilled workforce. In light of the uncertainty over US H1B visas, there has been speculation over doors opening for Indian IT specialists in the Russian market.[xxxvi] The speculation may well be justified.
Previous India-Russia joint statements invariably included the two sides’ commitment to international information security. A noticeable departure of the St. Petersburg Declaration is that it mentions not only the need for “security in the use of information and communications technologies”, but also for developing “universal rules, standards and principles of responsible behaviour on the basis of democratisation, and a model representing multi-stakeholderism with primacy of the State, in global internet governance”.[xxxvii]
Both countries’ interest in working jointly in the sphere of cyber security and the Internet of Things was demonstrated during the meeting between Russian Deputy Minister of Telecom and Mass Communications Rashid Ismailov and Member (Technical) Department of Telecom G.K. Upadhyay.[xxxviii] What is important is that the discussion is being held at different levels. It is reinforced by the interest shown by Kolkata-based Srei Infrastructure Finance in acquiring “technological solutions based on the principles of quantum physics that could be put to industrial use in the coming years”[xxxix] – a sphere in which Russia has the edge.
According to some reports, Russia is interested in selling its technologies in the Indian market. Likewise in Defence, Rostec State Corporation could co-develop solutions with Indian partners, transfer technology to clients through its subsidiaries and help educate users. Rostec’s potential offerings to India are healthcare database systems and crime-control solutions, but could also include other elements of the Smart City concept, such as the Bright City project, an ecological monitoring system and a smart transport system.[xl]
However, it is important to start developing cooperation directly at the business-to-business level, and the IT sphere may be a good place to start. There have already been some successful joint ventures, but these were individual cases.[xli] Unless collaboration becomes a trend, the two sides will have to keep battling against the obstacles of entering each other’s market.
There is a perception in India that to obtain high-technologies or get into technological partnerships, it is necessary to engage with either the US or Japan or the West European countries. Russia, though it has made considerable technological progress of late, often stays out of India’s sight. However, there are broad opportunities for intensifying Russia-India cooperation in high technologies. The areas include quantum computing, Artificial Intelligence, cyber security and traditional information technology.[xlii]
Although the technological discourse is included in the text of the St. Petersburg Declaration, there are not many examples of high technologies’ utilisation in the bilateral interaction. The only exception is military-technical cooperation, in which Russia remains the only world power to share its technological achievements with India. Russia’s readiness to share its latest scientific advances indicates the high level of trust that exists in the bilateral relationship. However, it is necessary to embrace more spheres of technological cooperation, so that the partnership gains new growth points. Until Russia and India ensure the steady development of their bilateral cooperation, the extension of “technical, economic and scientific cooperation to third countries” – one of the St. Petersburg Declaration’s postulates – seems to be premature.
Every joint statement of the two countries’ leaders has mentioned the need to develop people-to-people contacts between India and Russia. But there is a difference between declaring an intention and implementing it. The fact is that it is hard to see what has been done to foster closer contacts.
The future of a bilateral relationship depends on the people of the two countries understanding each other. For many ordinary Russians, India is associated with Bollywood, yoga, Ayurveda, and tourism. There is some interest in Indian culture among young Russians. Once upon a time, Russia used to be a favoured destination for Indian youth who wanted to study abroad. Today, there are a miniscule 4,500 students from India (out of a total Indian community of 14,000) in Russia, and 90 percent of them are pursuing medical studies.[xliii] The most desired destinations for Indian young people seeking to go overseas are the US and the UK where they get their education and some of them go on to find work. The pattern of interconnection between the Russian and Indian people has changed. This may not have influenced the state of the bilateral relationship as yet. The decision-makers in both Russia and India are still people who vividly remember the glorious years of Indo-Soviet relations, and the friendship between the two countries is still partly imbued by these emotions. But it remains a moot question whether the India-Russia relationship will have such an emotional basis after another 20-30 years, when power is in the hands of people born during the times of growing India-US ties and Russia-China friendship. It is a challenge of our times to ensure that the new generation of Russians and Indians remains committed to continuing the long-standing tradition of strong bilateral ties.
People-to-people ties require special attention for two reasons. First, academic and scientific cooperation is the linchpin for developing people-to-people ties. The India-Soviet relationship was largely based on close interaction between the academia of the two countries. Scholars have always provided insightful views of other countries helping to remove wrong perceptions which might arise at the political level. Close communication at the academic level creates opportunities to share viewpoints, discuss problems and achievements, and initiate new ideas.
Secondly, to achieve a breakthrough in the utilisation of high-technologies, it is important to stimulate dialogue between scientists of the two countries. The India-Russia declarations talk a lot about scientific cooperation, but in reality the two countries merely pay lip service to it. Establishing multiple inter-governmental commissions will not bring any result if they are not accompanied by dialogues between scholars.
Unless the two states confront the obvious decline in this sphere, India-Russia relations risk losing the ‘soul’ of cooperation, as there is already an increasing lack of knowledge in each country about the other. This is how misperceptions start.
People-to-people contacts are dependent on the opportunities provided to the two countries’ citizens to visit each other for official and non-official purposes. These opportunities are mainly defined by the visa regime of the two countries. It can be argued that the visa regime is a technical issue, but it still characterises the level of mutual trust and partnership between countries.
Visa regulations are an area of imbalance in the relations between India and Russia. Indian visa requirements for Russian tourists and businessmen are few. There is automatic electronic clearance for both tourists and casual business visitors. But Indian businessmen, to get a Russian visa, are required to prove that they have been invited by one of the following organisations: the Ministry of Home Affairs of the Russian Federation, the Russian Chamber of Commerce and Industries, the Russian Union of Industrials and Entrepreneurs, “OPORA Rossii”, the Russian Union of Manufacturers or else some Russian company[xliv]. The processing of documents can take up to 21 days.
The statistics of Indian visitors to Russia vary widely between different agencies. According to the Russian Federal Service of State Statistics, the number of Indian tourists travelling to Russia increased considerably between 2014 and 2015, though the absolute number of travellers remained much the same between 2013 and 2015 (See Table 1, the latest available data is for 2015). However, the data presented by the Russian Federal Agency for Tourism for 2015-16 is quite different (See Table 2).
Table 1. The number of trips by Indian citizens to Russia [xlv]
|Official||20 962||18 381||18 797|
|Tourism||17 824||16 304||27 783|
|Private||28 617||25 409||17 220|
|Serving Staff||27 495||33 862||1|
|Military Personnel||27 495||0||31 260|
|Total||95 542||94 259||95 527|
Table 2. Indian Tourist Arrivals, 2015-2016[xlvi]
Though the figures are at variance, both sets suggest an increase in the number of Indian tourists to Russia. In contrast, there was a significant decline of Russian tourist arrivals in India in 2015. This was mainly due to the economic situation in Russia that year. In 2016, the number of Russian tourists in India increased, almost touching pre-crisis times. The share of Russian tourist arrivals in India is comparable to that of German, French, Australian and even Chinese tourists’ visits (See Table 3).
Table 3. Nationality-wise Foreign Tourist Arrivals in India, 2014-2016[xlvii]
|Country of Nationality||Number of Arrivals||% Share||% Change|
To attract more Indians to Russia, the Russian government should pay more attention to immigration regulations and take measures to facilitate the visa application process. For instance, one of the requirements that could be abolished is that of entrepreneurs having to show an invitation from a Russian entity to travel there. The rule that tourists have to buy into a package tour before arrival could also be done away with. Obviously, businessmen and tourists are the main drivers of business cooperation and people-to-people ties.
There are indications that the government of Russia realises the importance of easing the visa regime to make Indian citizens’ arrivals easier. Starting this August, Indians have been included among 18 other countries whose citizens can visit the free port of Vladivostok by applying for a free single-entry electronic visa. According to the Russian Embassy in India, no documents confirming the purpose of the journey will be asked for. However, the permitted stay in Russia with an e-visa is a maximum of eight days starting from the date of entry.[xlviii] A similar procedure will also soon be introduced for visitors to Russia’s westernmost exclave of Kaliningrad.[xlix] These steps show the Russian willingness to attract foreigners to lesser known Russian regions, and hopefully represent the beginning of a trend to make visits to Russia easier.
India-Russia relations are going through a period of slight turbulence. There are at least three areas of concern, all of which are closely interconnected. Making progress only in one area may not lead to a qualitatively new level of relationship.
First, from a geopolitical perspective, the worrying signal is that the two countries have been drifting apart. The rapidly changing contours of global affairs and the series of crises occurring in different parts of the world have left the ‘strategic partners’ with little room for manoeuvre. Both Russia and India have to come to terms with the new reality, and operate bearing in mind each other’s interests. After all, ‘the strategic and privileged partnership’ requires strategic thinking.
Secondly, the relationship badly needs new drivers. The very modest economic interaction between India and Russia could be improved if the partnership includes technological cooperation, which could embrace every sphere – defence, space, energy, IT and cyber security. The digitalisation of cooperation will definitely spur its development and help both countries deal with domestic issues.
Thirdly, Moscow and New Delhi have to foster implementation of their intentions. Otherwise, the groundbreaking ideas and ‘substantial opportunities’ as well as the overall potential of the relationship are bound to remain unrealised. It is no use setting new targets if every year sets back some of the achievements of the past.
The next 30 years will be defining ones not only for the world order, in which new centres of power are increasingly rising, but also for the India-Russia relationship. For the history of relations between the Russian Federation and the Republic of India to continue without bitter disappointment, both sides should immediately begin to adjust their cooperation.
About the author
Aleksei Zakharov obtained his Diploma of Specialist in International Relations from the Volgograd State University. He completed his PhD on U.S.-India relations (1991-2016) at the same university, where his PhD viva was held in October 2017. He is a research fellow at the Centre for Indian Studies, Institute of Oriental Studies, Russian Academy of Sciences. He worked on this paper while working as a Visiting Fellow at Observer Research Foundation, New Delhi.
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