Economic Front: India, Russia Chart Roadmap For 2050 Partnership

Russia has the natural resources that can power an economy of the future, and India, today, has the scale and market. Both can collaborate to create a new template.

India-Russia partnership is now set to acquire a different dimension with Prime Minister Narendra Modi making the announcement: "Make in India, Partner with India". He went on to assert that New Delhi is ready to walk shoulder to shoulder with Moscow to develop sustainable solutions to global challenges.

This will go a long way to sustain the Special and Privileged Strategic Partnership for the next 25 years, building on the 25 years of the robust Strategic Partnership.

The ties between the two countries are built on trust and confidence. It is no exaggeration to describe this partnership as "a constant factor of stability for decades" amid fractured geopolitics. Despite the unprecedented global instability, this spirit has held on.

Russia symbolises India’s much cherished mantra for strategic autonomy, which the Western commentators are yet to fathom. The decision to give the much-needed momentum to trade, investment, and financial partnership has come at the most appropriate time.

The Robust India-Russia Ties

Russia’s pivot to Asia cannot be complete without a robust economic partnership with India. It also enables Moscow to reduce its overdependence on China, though it may not publicly acknowledge it. India’s economy cannot grow by being overly dependent on either the US or China. Russia’s huge fossil fuel, gas, and coal reserves fuel India’s growth story, and the other raw materials in Moscow, too, have the potential to boost New Delhi’s development and industrialisation goals.

Critics in the West often describe Russia as one big gas station. But the reality is that the mineral resources, including critical minerals and rare earths (many of which remain unexplored) across the Russian landmass (the Far East, the Arctic region, and such), provide the right ingredient for India’s new age economy — for which semiconductors would play a big role in both civilian and defence sectors.

The potential of the critical mineral partnership found mention in Prime Minister Modi’s remarks to the media after the summit: “Our cooperation in critical minerals is vital for ensuring secure and diversified supply chains across the world. This will provide strong support to our partnership in clean energy, high-tech manufacturing, and new-age industries.”

Looking Beyond China

The faster this partnership is put in place, the quicker India can reduce dependence on China for rare earth magnets. This would also give Moscow another viable option beyond China.

The significance of productive and mutually beneficial bilateral trade in mineral resources, including energy sources, precious stones, and metals, as well as critical raw materials, is substantial. The cooperation of Russia and India as sovereign States is crucial for their national security.

The slower India takes to establish the minerals partnership, the wider the Chinese influence would be, given the geographical contiguity between China and Russia. New Delhi and Moscow must now accelerate the momentum for connectivity initiatives, with special focus on the Vladivostok-Chennai Maritime Corridor and the International North-South Transport Corridor (INSTC).      

Vladivostok-Chennai Maritime Corridor

The Vladivostok-Chennai Maritime Corridor will come into play as New Delhi and Moscow have decided to intensify trade and investment cooperation in the Far East and the Arctic zone of Russia. The Program of India-Russia Cooperation in Trade, Economic, and Investment Spheres in the Russian Far East for the period from 2024 to 2029 provides the necessary framework for further cooperation between India and the Russian Far East region, especially in the sectors of agriculture, energy, mining, manpower, diamonds, pharmaceuticals, and maritime transport.

The abundance of rare earths, critical minerals, and other natural resources in Russia, and its value addition by India and the reality of the huge Indian market, is just one aspect of the economic partnership that is finally taking shape in full swing. Specific sectors have been identified for increasing Indian exports to Russia and for exploring joint ventures.

A joint venture to set up a fertilizer plant in Russia was a significant breakthrough.

Now, Indian exporters have a readymade market, amid the US tariffs on India and the Western sanctions against Russia. This also feeds into India’s MSME sector, giving them a big boost. The presence of the Indian MSME sector in large numbers at the India-Russia Forum on December 4-5 is a testimony to this fact. The presence of several Russian Ministers and a large business delegation that accompanied the President reflect their genuine interest in India. 

The icing on the cake was the mobility pact that would encourage the Indian workforce to go to Russia. Equally important were the pacts on maritime cooperation.

India-Russia Mutual Logistics Pact

Strengthening this sector will be the India-Russia Mutual Logistics Pact, which will give the Indian Navy access to the Arctic and expand the Russian Navy's presence in the Indian Ocean region. This is essential to balance China’s presence in the area. Contrary to certain commentaries, Russia and China are not always working in tandem on geopolitical issues. Moscow has an independent defence partnership with Vietnam, Myanmar, and Indonesia, much to the discomfort of China. After Philippines, Indonesia is all set to receive deliveries of BrahMos missiles jointly developed by India and Russia.

The "visa-free arrangement" is another outcome of the summit that would boost the economic partnership.

Russia and India have agreed to continue jointly developing systems of bilateral settlements through the use of national currencies to ensure the uninterrupted bilateral trade. The two countries have also agreed to continue their consultation on enabling the interoperability of the national payment systems and financial messaging systems, as well as the central bank digital currency platforms. Though nearly 90% of the transactions are in national currencies, integrating financial messaging systems would boost business in a big way.  

The Russian Central Bank is opening a representative office in Mumbai, its second such branch abroad (after one in China). Russia’s biggest bank, Sberbank, is opening another chapter in India.    

The Economic Front

The India-Russia Strategic partnership is unique and undoubtedly the strongest among all other partnerships globally. Yet, for years, this partnership was built primarily on defence ties, and space and civil nuclear cooperation, while the economic aspect was overlooked. 

New Delhi and Moscow have now decided to boost this economic pillar in a big way to make their bonds holistic and stronger for the next 25 years. 

(The writer is a commentator on geopolitics and geoeconomics. Views are personal.)