India-Russia to hold their first ever strategic dialogue in July in St Petersburg
The first ever Indo-Russian Strategic Economic Dialogue will be held in St Petersburg this July to strengthen the economic partnership between the two nations. The strategic dialogue was planned by Indian PM and the President of the Russian Federation in their informal summit.
The dialogue has been initiated to put a mechanism in place for partnership between Russian regions and the Indian states. The focus will also be on the IT and services sector, potential trade sectors as well as investment opportunities.
The dialogue will be preceded by the Indian Commerce Minister’s visit to St Petersburg International Economic Forum.
Current Bilateral Trade Scenario
India-Russia bilateral trade reached US$7.7 billion in 2017. Traditionally, trade between the two countries has been in favor of Russia because of dominance by Russian exports in the energy and defense sectors. Gems and jewelry is also imported by India in large quantities from Russia.
Russia has enjoyed trade surplus over India throughout the years. In 2017 India’s trade deficit accounted for US $4.6 Billion.
To reduce the trade deficit, India needs to increase its exports of products with potential. India should explore sectors like pharmaceuticals, textiles, agricultural commodities and machinery and engineering products to improve the current trade imbalance. Russia’s top imports of the products currently are from China, Germany and United States of America.
India’s export to Russia is expected to witness a boost once the International North South Trade Corridor (INSTC) comes into operation. The 7,200 km multi-mode transport network is expected to have an estimated capacity of 20-30 million tonnes of goods per year. This route linking Indian Ocean & Persian Gulf to the Caspian Sea and onward to northern Europe via Russia, will be shorter and less costly than Suez Canal (used earlier by India to transport goods to Russia) and will connect the two nations within 16-21 days at competitive freight rates. The commencement of the corridor will help increase India’s presence in the Russian market and address the trade deficit issue.
Russia is the most important strategic partner of India. However the economic content of the partnership is extremely weak, and urgent and vigorous steps need to be taken to improve the economic relations. The upcoming strategic dialogue should raise the trade imbalance issue as well to change the current scenario and penetrate the Russian markets with ease.
*Source: 1) Ministry of Commerce & Industry, EXPORT IMPORT DATA BANK.
2) ITC Trade Map.