Non-tariff barriers, regulatory impediments must be addressed: EAM on India-Russia trade
The imbalance in India-Russia trade requires “urgent redressal”, including speedy steps to address non-tariff barriers and regulatory impediments, external affairs minister S Jaishankar said on Monday against the backdrop of Indian exports accounting for less than a tenth of the overall two-way trade of about $66 billion.
The two countries will have to find solutions to concerns such as banking and payment-related issues, logistical challenges, insurance and market access, Jaishankar said while addressing the India-Russia Business Forum in Mumbai alongside Russia’s first deputy prime minister Denis Manturov.
Both sides should expedite negotiations on the proposed India-Eurasian Economic Union free trade agreement, and they also need to speed up talks on a bilateral investment treaty, he said.
“Our bilateral trade is today at $66 billion. This makes the goal of reaching $100 billion by 2030 more than realistic,” Jaishankar said.
“The balance of trade, however, needs urgent redressal since it is so one-sided. It is imperative that non-tariff barriers and regulatory impediments are speedily addressed for this to happen.”
India and Russia set a bilateral trade target of $100 billion by 2030 during the annual leaders’ summit in July. The two sides have already achieved trade worth $30 billion before the target year of 2025, though India has concerns about its exports being worth less than $5 billion in the overall figure of about $66 billion during 2023-24.
Jaishankar said it is natural that there would be concerns such as banking and payment-related issues, logistical challenges such as shipping, insurance and reinsurance, and market access. “Obviously, we have to find solutions that work to the comfort level of those actually involved in trade,” he added.
He noted that mutual settlement of trade in national currencies is of “great importance, especially in the current circumstances” – an apparent reference to Western sanctions imposed on Russia over the invasion of Ukraine. “Special rupee vostro accounts are right now an effective mechanism. However, even in the short run, a better trade balance with national currency settlements is the answer,” he said.
The signing of a bilateral agreement on authorised economic operators between Indian and Russian customs authorities in May 2024 has had a “big impact on smoothening the ease of doing trade”, Jaishankar added.
India and Russia also need to pay continued attention to three connectivity initiatives – the International North-South Trade Corrdior (INSTC), Chennai-Vladivostok corridor and Northern Maritime Route – while a growing Russian appreciation of “Make In India” as a programme to deepen business will help to drive cooperation in many domains.
The business meeting is a follow-up to the annual summit between Prime Minister Narendra Modi and President Vladimir Putin in Moscow in July and another meeting of the two leaders on the margins of the Brics Summit in Kazan in October. Despite pressure from the West, India ramped up the purchase of discounted Russian crude in the aftermath of the invasion of Ukraine.
Jaishankar pointed out that India-Russia cooperation should be seen in the context of a larger international setting, including a world moving towards greater multipolarity, and said that “devising appropriate methods of cooperation is essential if we are to keep up”. At the same time, more avenues of cooperation have emerged because of Russia’s deeper focus on Asia since 2022.
“That we have a long history of strong convergence and deep friendship allows us to make the best of both factors…A partnership between an India that has an 8% growth rate for multiple decades ahead, and a Russia that is a key natural resources provider and a major technology leader, will serve both of them and the world well,” he said.
If the complementary nature of the Indian and Russian economies is recognised, their approach will not be transactional and instead aimed at building long-term partnerships.
“In energy domains such as oil, gas, coal or uranium, India will always be a major player in the international markets. This applies as well to the demand for fertilisers of various kinds. Constructing a mutually beneficial arrangement will help us both address the volatility and the uncertainty of our times,” Jaishankar said.