Russia, India agree to go ahead with trade in national currency : Diplomat

 

India and Russia agreed to establish a national currency settlement system during Prime Minister Modi’s visit to Russia, amid deepening economic ties and discussions on geopolitical issues, including Ukraine and fraudulent induction of Indians into the Russian army.

Babushkin criticised Western support for Ukraine and described the peace conference in Switzerland as a “tamasha” (charade) and highlighted the emergence of new independent power centres like India and Russia.

Russia’s friendship with China should not concern India, according to Babushkin.

Russia is the fourth largest trading partner of India, with significant growth in trade, particularly in energy, after Western sanctions on Russia.

Modi and Putin’s discussions focused on economic cooperation and the issue of Indian nationals fraudulently inducted into the Russian army.

India-Russia

Significance of India Russia Relations

1. Geopolitical- Deepened strategic partnership with India holds a lot of geopolitical importance for India. a. Russian support on critical Issues- Russia supports India’s demand for permanent seat in the UNSC. It has also supported India’s stand on the Kashmir Issue. b. Counterbalancing Chinese Aggression- Russia can help in defusing rising tensions with China.
2. Defense- Russia still remains a critical defense supplier for India with 60-70% of India’s defense equipment estimated to be of Russian and Soviet origin. Though India has diversified its defense imports from countries like US, France, it still cannot alienate Russia especially in the face of Chinese aggression at the border.
3. Economic- The purchase of large amounts of Russian oil at a discount, cushions India from the inflationary impact of rising crude prices. India is contemplating a Free Trade Agreement (FTA) with the Eurasian Economic Union led by Russia.
4. Strategic Balancing
5. Smooth India-Russia relations offers India a better bargaining chip in negotiations with the western powers. It also offers India to strategically balance and align with the powers according to its national interest. For ex- PM Modi’s visit is taking place when leaders of the 32 nations in the North Atlantic Treaty Organisation (Nato) gather in Washington DC to celebrate 75 years of the anti-Russia military alliance.
6. Close India-Russia relations provides New Delhi the opportunity to offset the Chinese advantage in Eurasia.

Challenges in the relation

1. Deepening of India-US relations- The India-US relations is rapidly deepening especially in the defense sector, which is exemplified in the India-US nuclear deal in 2008, US emerging as the top arms supplier to India by overtaking Russia and India-US Foundational agreements such LEMOA, COMCASA, BECA.

Due to these developments, Russia changed their decades-old policy and start supplying China with weapon systems like Sukhoi 35 and the S-400 missile defence system.

1. Russia’s growing dependence on China- Moscow and Beijing have forged the closest possible ties in their history. This has generated fears that Russia will become a subordinate partner given the growing economic, demographic and technological asymmetry between them. This could jeopardize Moscow’s neutrality on Sino-Indian tensions.
2. Russia’s increased engagement with Pakistan- Russia has been increasing its economic and defence cooperation with Pakistan, like conduction of bilateral exercise Friendship. The RCP axis (Russia, China, Pakistan) will be detrimental to India’s national interest.
3. Trade Imbalances- Even though the bilateral trade between the two nations has increased in the face of crude oil imports, there is considerable trade imbalances between India and Russia. Of the total trade of $65 billion, India’s exports constitute less than $5 billion.
4. Defense Delays- There have been considerable delays in the delivery of military spares and bigticket weapon systems like the S-400 Triumf surface-to-air missile systems, to India due to the Ukraine War. 5. Ukraine Crisis- The continuing Russia-Ukraine war has put India into a diplomatic tightspot. India has been facing significant criticism for not condemning the invasion and continuing energy and economic cooperation with Moscow.

Way Forward

1. Neutral Player in the resolution of Ukraine Crisis- India must continue to maintain its positioning as a neutral player that could be a mediator between the two sides in the resolution of the Ukraine Crisis. India must continue to appeal to both sides to ‘abide by the international rules and conventions‘.
2. Addressing defense supply chain shocks- India and Russia must explore setting up joint venture partnerships to address the shortage of critical defense spare parts.
3. More diplomatic and financial investments- India and Russia must invest more diplomatic and financial resources to finish the pending works for the International North-South Transport Corridor. Both sides should expedite discussions on the Free Trade Agreement with the Eurasian Union for better trade and commerce.
4. Enhanced focus on Eurasia- India and Russia have to explore their opportunities in the Eurasian region. India can study the possibility of expanding Russia’s idea of ‘extensive Eurasian partnership‘ involving the EAEU(Eurasian Economic Union) and China, India, Pakistan, and Iran.
5. Unequivocal message to the Western countries- India must send unequivocal message to the West that Russia occupies a pivotal place in India’s strategic calculations. It must be conveyed that the West needs India just as much as India needs the West.

PYQ UPSC Prelims : (2019)

Ques: Recently, India signed a deal known as ‘Action Plan for Prioritization and Implementation of Cooperation Areas in the Nuclear Field’ with which of the following countries?

(a) Japan

(b) Russia

(c) The United Kingdom

(d) The United States of America

Ans: (b)