India stresses need to address trade imbalance with Russia
Jaishankar’s remarks, made while addressing the India-Russia Business Forum in Mumbai alongside Russia’s first deputy prime minister Denis Manturov, came against the backdrop of New Delhi running up a massive trade deficit of almost $57 billion with Moscow.
New Delhi The imbalance in India-Russia trade needs to be addressed urgently, including steps to remove non-tariff barriers and regulatory impediments and facilitate the settlement of trade in national currencies, external affairs minister S Jaishankar said on Monday.
Jaishankar’s remarks, made while addressing the India-Russia Business Forum in Mumbai alongside Russia’s first deputy prime minister Denis Manturov, came against the backdrop of New Delhi running up a massive trade deficit of almost $57 billion with Moscow.
The two countries need to find solutions to banking and payment-related issues, logistical challenges and market access, Jaishankar said. They should also expedite negotiations on a proposed India-Eurasian Economic Union free trade agreement and 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.”
In an apparent reference to Western sanctions on Russia over the invasion of Ukraine, Jaishankar said: “Mutual settlement of trade in national currencies is of great importance, especially in the current circumstances.”
He added, “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.”
India and Russia set a bilateral trade target of $100 billion by 2030 during the annual leaders’ summit in July, after already achieving trade worth $30 billion before the target year of 2025. However, India has concerns over 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.
The signing of a bilateral agreement on authorised economic operators between Indian and Russian customs authorities in May 2024 had a “big impact on smoothening the ease of doing trade”, Jaishankar added.
Both Jaishankar and Manturov emphasised three connectivity initiatives – the International North-South Trade Corrdior (INSTC), Chennai-Vladivostok corridor and Northern Maritime Route – to cut the time and cost of transporting cargo and driving trade.
The business meeting was 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, leading to trade increasing fivefold in the past three years.
Jaishankar noted India-Russia cooperation should be seen in the context of a larger international setting, including a world moving towards greater multipolarity. More avenues of cooperation have also emerged because of Russia’s deeper focus on Asia since 2022.
“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.
Jaishankar stressed India will be a major player in the international markets in energy domains such as oil, gas, coal or uranium, as well as for fertilisers. “Constructing a mutually beneficial arrangement will help us both address the volatility and the uncertainty of our times,” he said.
Manturov, who will co-chair a meeting of the Intergovernmental Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation (IGC-TEC) in New Delhi on November 12, said business circles in Russia and India have shown pragmatism and readiness for cooperation despite “difficult external conditions”.
In addition to growth in trade, it is important to diversify its structure, balance commodity flows and increase the share of non-raw materials and hi-tech products, he said, speaking in Russian.
Manturov contended that Western sanctions haven’t had the desired impact, as Russia’s production volumes increased by 8% in the first eight months of 2024 while investments in manufacturing industries grew by 25% in the first half of the year. “The authors of the sanctions did not achieve their goals. On the contrary, our country’s vector of movement towards sovereign development has only become clearer and firmer,” he said.