Russia Eyes Trade And Investment Pacts, Use Of National Currency To Boost Business Ties With India

With booming oil trade between the two countries, Russia is now planning to have a free trade agreement (FTA) and an investment deal with India in order to boost business and economic ties between both countries even as Moscow has come under crippling economic sanctions due to its war against Ukraine.

Addressing the Indian industry Monday along with External Affairs Minister S Jaishankar, Denis Manturov, Deputy Prime Minister and Minister of Industry and Trade, Russia, said the sanctions imposed by the West have created “systematic problems” in the global markets.

“Together with Eurasian Economic Commission we are looking forward to intensifying negotiations on the Free Trade Agreement with India. Additionally, we are working on signing the Russia-India Bilateral Agreement for the Promotion and Protection of Investments. I am sure that trade preferences and mechanisms that guarantee the protection of investments will be in demand among Russian and Indian businessmen,” he said Monday.

Manturov, who is on a two-day visit to India, co-chaired the Intergovernmental Russian-Indian commission on trade, economic, scientific, technical and cultural cooperation.

Manturov also met National Security Advisor Ajit Doval and discussed a range of bilateral issues to implement the India-Russia strategic partnership, according to sources.

According to Jaishankar, New Delhi is in “advance agreement” to have the FTA with Russia and is also exploring a range of products that can be exported in high volumes to Russia and the larger Eurasian markets.

Russia is India’s largest arm exporter and post the Ukraine war it has also become India’s biggest exports of crude oil.

“We need to find a niche in the products which India can replace … In civilian projects, we need as wide cooperation as it was before the sanctions,” Manturov told reporters on the sidelines of the industry event.

According to Manturov, Indian investors who are keen to invest in large-scale infrastructure projects in Russia will be given the facility of “cluster investment platform” wherein they will get preferential credits for designing and manufacturing of priority products, subsidies for pilot batches of goods, insurance premium and income tax preferences.

“One-sided illegitimate sanctions by western states against Russia provoked systemic problems on the global markets,” he said, adding that such steps have adversely impacted the supplies of oil products, fertilizers and food products.

“It led to an acceleration of inflation in many countries. It also created difficulties for international transport flows, cargo insurance and financial transactions,” he added.

At the intergovernmental consultations, he said, “We will rely on trusted foreign partners. We will make every effort to expand our cooperation ties. To exchange competence and experience in the most promising technological areas.”

'Wide Use Of National Currencies' 

The Russian side also stressed on the wide usage of national currencies, especially with their friendly countries, to conduct international trade thereby doing away with the usage of American dollar.

"Within the framework of the intergovernmental dialogue we propose to consider the possibility of the wide use of national currencies and currencies of friendly countries," Manturov said. "This will allow the minimization of expenses and currency risks,” he further said. 

“We also consider the development of transport and logistics infrastructure as one of the most important tasks. In particular, India could become one of the key partners within the framework of development of the International North-South Transport Corridor,” he said.

According to the Russian Deputy PM, both sides should also look at increasing air connectivity between both countries for regular exchange of businessmen and tourists.

Meanwhile, Sergey Cheremin, Minister of Dept. of Foreign Economic Activity and International Relations, Moscow City Government, who is part of the delegation led by Manturov said Russian airliner Aeroflot is planning to increase its flights to India.