Deputy Prime Minister Denis Manturov,
Mr. Rajyavardhan Kanoria
Mr. Sergey Cheremin
Our Ambassadors, both of them,
Let me begin by saying that it gives me great pleasure to address this inaugural session of "India-Russia Business Dialogue" 2023. This is an outcome of a partnership between FICCI and the Ministry of External Affairs with the Business Council for Cooperation with India (BCCI). So, I commend the efforts of all those who have made this event possible.
Let me begin really by appreciating the fact that my distinguished counterpart, Mr. Denis Manturov, Deputy Prime Minister is here today leading a large Russia delegation. I will be meeting him tomorrow in my capacity as the Co-Chair of India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation (IRIGC-TEC). And, in fact, in the last year, the two of us; and I visited Moscow in November 2022 and I interacted with him virtually just a month ago, we have really prepared the ground for tomorrow’s meeting and as he himself stated, we will be looking at many policy and process issues designed to expand our cooperation. And I would suggest that perhaps, at the conclusion of your meeting today, if there are some key concerns which the Business has expressed; and I heard, for example <
> mentioning some of them, and other colleagues did as well, I think it would be very useful for us to consider what the business feels are problems for business, and we will certainly factor that in, tomorrow in our calculations.
I begin by emphasizing that business has a key role in driving the growth and sustainability of any relationship. And that is precisely the reason why we are meeting here today. Now the enabler, of course, is our time-tested and long-standing friendship, and we actually capture it in the term Special and Privileged Strategic Partnership between our two countries.
In the last decade, we have seen enhanced levels of cooperation in many areas. And these include the fields of energy, science & technology, inter-regional cooperation. And they supplement what were the traditional areas of defence, of nuclear and of space.
Recently, we have also been discussing how to expand and diversify our bilateral trade and economic cooperation. And I have myself, for almost a decade now, been personally involved in these efforts. And I believe that today, these are yielding results.
Now, we have crossed the bilateral trade target of USD 30 billion before the year 2025, which was the target year given to us by our leaderships. And infact, for the period April, 2022 - February, 2023, I understand that the trade is actually about USD 45 billion and the expectation is that this will continue to grow. At the same time, I think am not the first speaker, Mr. Kanoria actually began by mentioning this, that there is also understandable concern about the trade imbalance which these new volumes have created. And we need to work together with our Russian friends on a very urgent basis on how to address that imbalance. And addressing that imbalance really means addressing the impediments- whether they are market access impediments, whether they are Non Tariff barriers, whether they are related to payments or to logistics. And I really cannot emphasize this enough. I think, we should also, in a business gathering, be honest about the short and medium term challenges that we face. And you know, there could be quite frankly, there could be over-compliance, they could be over-anxiety, or even over-caution on our side. And equally, on the Russian side, there could be an inadequate appreciation of the concerns and the risks that the Indian businesses face. So, I would say what really the future of our economic cooperation requires, is the willingness, the ability to really look at it from the point of view of the other party and then come up with solutions which will overcome the obstacles. Now the possibilities, I think, are both in, you know, I would say, gaps which may have emerged in recent months but also new areas. And I completely agree that I think today payments, logistics, certifications-these are really the key areas. And I am convinced that it is possible to really find solutions, because if you look even in the last year, and this is something which the deputy PM himself is personally involved, we found ways, for example, of looking at, the fertilizer trade, in a much more mutually acceptable way. So, I think if we can look at an area like fertilizer, surely you know, the same spirit of cooperation and mutuality, we can look at other areas and look to find solutions.
Now, in terms of how do we diversify and expand the basket of goods, I think clearly we need to motivate business on both sides. So, I am glad we had a motivational speaker also. Apart from the traditional exports of pharmaceuticals and organic chemicals, clearly there are possibilities in auto and spare parts, electronics goods and components, medical devices for which there was a speaker; on high efficiency solar PV modules, textile & apparel, white goods, leather, ceramics, but also I would emphasize food and agricultural products; because this is one area where SPS restrictions have been really going on, frankly, I personally remember now, for almost the last 9 years.
Where India is concerned, I would like our Russian friends to appreciate that you can see there are big changes which are going on. There is a "Make in India" initiative which is aimed at promoting greater manufacturing capacities. And we are determined to make India a major global manufacturing hub. There will be greater production based in India. And not just for our own growth, but also because we believe that in times of global instability, that the world economy requires more resilient and reliable set of supply chains. Infact, one of the big lessons of Covid is how do we de-risk the global economy by having many more production options. And it is clearly our strategy today to position ourselves as a major manufacturer, as a bigger trader, as a stronger service provider. And I think it should be of interest definitely to our Russian friends.
I also want to specially emphasize the opportunities for joint projects in the "Make in India – Make for the World” format. And Russia is known for its technology strengths; and India today is focussing on production scaling and product distribution. So, even our traditional areas infact could benefit from this, but clearly there are third country market implications here, which our companies should be looking at.
Let me also talk a little bit about the enabling environment. We have been having discussions for a Free Trade Agreement between India and the Eurasian Economic Union. The Covid interrupted those discussions, so I would very much hope that our colleagues will pick up on this. We will certainly encourage them from the Foreign Ministry side. Because we do believe that they will make a real difference to our trade relationship. We also are in advanced negotiations on a new Bilateral Investment Treaty (BIT), and we appreciate that this is perhaps necessary; certainly useful to provide sufficient confidence to investors.
Now, there has been some talk, rightly, in my opinion, about the importance of connectivity initiatives. The International North South Transport Corridor as well as the Eastern Maritime Corridor, which is the Chennai-Vladivostok Corridor, and these are being given due consideration. I think there have been a number of events in the last few years, including the blockage of the Suez Canal which underline why it is necessary for us to have many more connectivity options. Not all obstacles are necessarily logistical; but I think everybody would agree that to the extent we can address this. And certainly the Eastern Maritime Corridor, I think, fits in with our goal, what is called "Act East Policy", as well as the Russian policy of having the Far East come in as a additional driver of the economy. So, I think there is a synergy there which is waiting to be tapped.
There is also obviously discussions on the payments issue. The expansion of the correspondent relationship network, under the scheme of International Trade Settlement in Indian Rupees through Special Rupee Vostro Account system. And I think the payments issue clearly needs to be worked through between our systems. It is something we will also be discussing at the meeting tomorrow.
Now, in the last 9 years, the Modi Government, again I say this particularly for the benefit of our Russian colleagues, that the Modi Government has undertaken a number of important economic reforms. And these are actually of interest to you, if you are looking and evaluating opportunities in India, because they do include incentivizing production, in doubling down on infrastructure and logistics, in rationalizing taxation, in moving the economy from the more informal to the organized sector, and in cleaning up and resourcing the financial system. We would like our friends in Russia to appreciate this transformation which is underway, because its compounding strength will enable both of us to strengthen each other's strategic autonomy, if we can translate this into economic cooperation.
Our two countries historically have also had a strong people-to-people connection. But, I must point out that we actually get less than 1 percent of Russia’s outbound tourism. When we are talking today of exploring new areas and new opportunities, I would also flag that whether more direct flights to more destinations, will provide a possibility for greater business when it comes to tourism.
Finally, as a Foreign Minister, let me try to place the economic cooperation in a strategic context. Our partnership today is a subject of attention and comment, not because it has changed, but because it has not. Indeed, it has been among the steadiest of the major relationships of the world in the contemporary era. But that by itself is not enough. We share a commitment to a multi-polar world. And that also means a multi-polar Asia. Russia is today looking much more towards Asia, a reassessment from its traditional focus. For India, this could mean a broadening out of our engagement that was overly reliant on the triad of military, nuclear and space cooperation. For Russia also, it presents a broader set of options. As Russia looks eastwards, its resource and technology complementarity can be a powerful contribution to India’s growth. And this is a growth of a 3.5 trillion economy that is expected to grow at more than 7% for at least a decade or more. And I would say that our ties, our cooperation is best advanced through more intensive bilateral engagement such as the one that we are having today.
I have already spoken of the implications of new connectivity and the role of industry collaboration. So, I conclude by saying that what we make of the current situation depends very much on us which is why today’s gathering is particularly important.
Thank you once again for your attention.